Leave Encashment Calculator

Estimate leave encashment — and the portion exempt under Section 10(10AA), as of FY 2026-27.

Your details

Leave encashment is usually paid on Basic + DA for unused earned leave.

Basic + DA (₹ / month)

₹

Leave days to encash

Per-day basis

Context

Your leave encashment

Encashment amount—

Per-day rate —
Days —
Encashment amount —
Tax-exempt —
Taxable —

Estimate only, FY 2026-27. Encashment while in service (or on resignation) is fully taxable as salary. On retirement, non-government employees are exempt under Section 10(10AA) up to a ₹25,00,000 lifetime cap (raised from ₹3,00,000 in 2023); government employees are fully exempt. Confirm with your finance team.

How it works

How leave encashment is calculated and taxed

Leave encashment is the payment you receive for unused earned leave, most commonly at exit. It is generally computed on Basic + Dearness Allowance: the per-day wage (Basic + DA divided by 30) multiplied by the number of leave days being encashed. The tax treatment depends on your situation. For non-government employees, encashment received on resignation or retirement is exempt under Section 10(10AA) up to the least of four limits: the actual amount received, ₹25,00,000 (a lifetime ceiling across all employers, raised from ₹3,00,000), ten months’ average salary, or the cash equivalent of unavailed leave capped at 30 days per completed year of service. Any excess is taxable. Encashment taken while still in service is fully taxable as salary. Government employees are fully exempt. This tool gives a simplified estimate — confirm the exact figures with your finance team.

FAQ

Questions, answered

How is leave encashment calculated?

It is the per-day rate multiplied by the number of encashable leave days. The per-day rate is Basic + DA divided by the working-days basis your employer uses — commonly 26 or 30 — so confirm which divisor your company applies.

Is leave encashment taxable in India?

If taken during service or on resignation it is fully taxable. On retirement it is fully exempt for government employees; for non-government employees it is exempt up to a ₹25,00,000 lifetime limit (raised from ₹3,00,000 in 2023), with the balance taxed.

Is leave encashment paid on basic or gross salary?

Most employers compute encashment on Basic + DA rather than full gross salary, in line with how the statutory exemption is framed. Some companies use a wider base, so check your leave policy for the exact components.

How many leave days can be encashed?

This depends on your company policy and statutory caps. Many employers cap accumulation and encashment of earned leave (for tax purposes the exemption assumes up to 30 days per completed year of service), so check your leave rules for the limit that applies to you.

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