Leave Encashment

Leave encashment is a process where an employee is paid in exchange for the unused leaves that he/she has accumulated over a period of time. It is a benefit provided by many organizations to their employees.

The amount of leave encashment paid to the employee depends on the company's policy and the number of unused leaves that the employee has accumulated. Typically, organizations have a fixed rate at which they pay for each day's leave. This rate can vary depending on the company's policies, the employee's designation, and the length of service.

In some cases, there may be a limit on the number of days that an employee can accumulate and encash. Organizations may also have rules around when an employee can encash their leaves. For example, some companies may allow employees to encash their leaves only after they have completed a certain number of years of service.

It is important to note that leave encashment is taxable under the income tax laws of most countries. Therefore, the amount received by the employee as leave encashment is subject to tax deduction at source (TDS). Additionally, the employee's salary package may be impacted as leave encashment is considered a part of the overall compensation package.