Leave Encashment

Accumulated leaves encashed on termination of service. Though not compulsory each Company's scheme varies. Actuarial Valuation of future liability is mandatory. Employees in the organization are entitled to certain leaves during the year. The leaves can either be availed during the year or can be carried forward. At the time of leaving the service employee can encase the accumulated leave on salary at that time if the company's rules permit. As per Accounting Standard - 15, it is Mandatory to reflect the liability in the Annual Accounts. This liability is required to be valued by an Actuary. Funding of the Liability benefits does not enjoy any tax benefits.