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Hi Anuradha, As per the law the formula for calculating the EL Encashment is:- (Basic + DA)* Total No of Balance EL/26 PF is also payable on this amount. Abhishek
From India, Delhi
From India, Delhi
Dear Anuradha : :roll: Actualy all the above procedures are correct,But sometimes it is up to the your mngmnt policies- some companies having the procedure of calcluting of 3 times of thier basic/ 2 times of their gross salry. Universal Leave encashment formul is-- Basic+D.A/26(some companies 30 Days also)*no of leaves =Total-Pf=Net amount payable (Pf should be deducted) harish
From India, Bangalore
From India, Bangalore
Dear Anuradha Mohan is right. I totally agree since we too follow the same practice. Regards Annie
From India, New Delhi
From India, New Delhi
Hi, Can anyone explain, If we made any cash payment on leave with wages (i.e leave encashment). Is there any deductions we have to be made over on this amount under Factories Act.
From India, New Delhi
From India, New Delhi
Hi reena, I want to add one point. PF on leave encashment can be limited to 6500 in a month. In whatever month you pay leave encashment, you add the leave encashment Basic or (Basic & Da as applicable) with that month's actual payable basic and you can make PF deduction upto 6500 limit. Let us take an example : Say monthly basic is Rs.5000, say leave encashment basic is 2500, you will be liable to pay PF on leave encashment upto 6500 only and not on 2500 as a whole. With regards, AM
From India
From India
Normally the method followed is Basic Salary / 26 * leave days. Recent trends of salary decided in CTC per annum form leads to eraning paid and deducted in gross method divided by 30 days, as the salary for a day in a year is committed Any other combination might not be comprehensively applicable
From India, Mumbai
From India, Mumbai
Dear Friends, In terms of section 2 subsectionb The definition of Basic Wages read as " Maens all emoluments which are earned by an employee while on duty or[on leave or on holiday with wagrs in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him.........." As such PF deduction to be made from the Leave encashment whenever it is encahshed and matching contribution to be given by the employer. The Leave encashment is taxable but PF will reduce the burdan of tax . Regards SC MAHTO GAIL,Chandigarh
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
SC -PF judgment on No PF on Leave encashment.doc
EPFO Circular Leave Encashment.jpg