How to use the Leave Encashment Calculator
- Enter your monthly basic salary plus DA.
- Enter the number of earned leave days to encash.
- Choose the divisor your company uses.
- See your leave encashment amount.
Leave encashment formula
Leave encashment = (Basic + DA) ÷ 30 × number of leave days.
Some companies divide by 26 working days instead of 30, which gives a higher amount. Check your HR policy.
Tax on leave encashment
Leave encashed while you are still working is fully taxable. At retirement or resignation, non-government employees get an exemption of up to ₹25 lakh in their lifetime under Section 10(10AA). Government employees get a full exemption.
Frequently asked questions
Is leave encashment taxable?
It is taxable if received during service. At retirement or resignation, up to ₹25 lakh is tax-free for private employees.
Which leaves can be encashed?
Usually only earned leave or privilege leave. Casual and sick leave normally lapse at year end.
These tools give estimates for general guidance and are not financial or tax advice. Rates and rules can change; check official sources before making decisions.