Leave Encashment

Calculate leave encashment amount and tax liability in India. Find out how much you receive for unused earned leaves at resignation or retirement.

Leave Encashment Calculator

Calculate leave encashment payout and tax exemption

Monthly salary (basic + DA) Rs 50,000
Rs
Unused earned leaves 30 days
days
Years of service 10 yrs
yrs
Reason for encashment
Leave encashment amount
---
gross payout
Tax exempt amount
---
not taxable
Taxable amount
---
added to income
Encashment calculation---
10 months salary limit---
Statutory limit (Rs 25 lakh)Rs 25,00,000
Exempt amount---
Taxable amount---

Tax exemption applies at retirement/resignation. Leave encashment during service is fully taxable. Based on Section 10(10AA).

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ThriftRupee Insight

Leave encashment at retirement is tax-free for government employees up to Rs 25 lakh (increased from Rs 3 lakh in 2023). For private sector employees, encashment during service is fully taxable. Encashment at retirement/resignation: exempt up to the least of -- actual encashment, 10 months salary, Rs 25 lakh, or cash equivalent of leaves (at last drawn salary). Never encash leaves unnecessarily during service -- save them for retirement to maximise tax-free benefit.

Leave Encashment Calculator India 2026

Calculate leave encashment payout and tax exemption under Section 10(10AA). Covers retirement, resignation, and during-service encashment with updated Rs 25 lakh limit.

Frequently asked questions

How is leave encashment calculated?▼
Leave encashment = Number of days x (Monthly salary / 30). Example: 45 days leave at Rs 50,000 monthly salary = 45 x (50,000/30) = Rs 75,000. Some companies use 26 working days instead of 30: 45 x (50,000/26) = Rs 86,538. Check your offer letter or HR policy for which denominator is used.
Is leave encashment taxable in India?▼
During service: Fully taxable as salary income. At retirement/resignation: Exempt up to the least of: actual encashment received, 10 months average salary, Rs 25 lakh (revised limit 2023), or cash equivalent of unused earned leaves (max 30 days per year of service). Government employees get full exemption at retirement. Private sector employees must calculate the minimum of these four limits for exemption.
What is the maximum leave I can accumulate?▼
Private sector: As per company policy -- typically 30-45 ELs (Earned Leaves) per year with carry-forward capped at 60-90 days. Government sector: 30 ELs per year, carry-forward up to 300 days, full encashment at retirement (now tax-free up to Rs 25 lakh). Strategically accumulate ELs toward retirement for maximum tax-free encashment benefit.

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