Which allowances are exempted from tax while calculating an employee final settlement?

If you are a salaried individual, I am sure your are aware of different types of LEAVES like casual leave, earned leave, sick leave, personal leave etc., Sometimes, you may not avail all the leaves that are available to you and some of your leaves may remain unused.

Most of the companies allow you to en-cash the unused balance of leaves during your service or during resignation. You are also allowed to en cash them on retirement. So, en cashing the leave balance is known as ‘Leave Encashment’