How to make leave encashment taxable?

Organizations are required to provide a minimum of 12 paid leaves annually if an employee has worked for 240 days or more in a year. However, sometimes an employee may not utilize all their assigned leaves in a given year. Depending on the company's policy, such leaves may either get carried forward or encashed. When an employee receives money in exchange for such unavailed leave, it is referred to as leave encashment.

Begin by navigating to the Org(1) section and selecting the Exits(2) tab. Within this tab, proceed to the Exit process(3), and go to  Exits in Progress Phase(4). This section displays a comprehensive list of all employees whose resignations have already been accepted.

Select the "Manage(5)" option found in the Actions column. 

This will open a side window, choose the Finances(1) section here. Click Review & Finalise.

Now on page 1 Payable Components Select the Leave(1) section. Here For Leave Encashments(2) check the option Exclude from exemptions(3). Finally don't forget to click Save & next(4).

Now you know how to make the leave encashment of an employee taxable. 

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