About the Leave Encashment Calculator
What is the Leave Encashment Calculator?
Unused earned leave can be converted into cash. Leave encashment during service is fully taxable, but on retirement or resignation a large part can be tax-free.
For private-sector employees, the exemption is the least of four limits, including ₹25 lakh; government employees' encashment on retirement is fully exempt.
How to use the Leave Encashment Calculator
- Average Monthly Basic + DA, Last 10 Months (₹) (sample: 60,000)
- Earned Leave Days to Encash (sample: 150)
- Daily Rate Basis (sample: Monthly salary ÷ 30)
- When Encashed (sample: On retirement or resignation – private employee)
- Completed Years of Service (sample: 20)
- Your Income Tax Slab (sample: 30%)
- Press Calculate Leave Encashment (results also refresh as you type). The result card shows the Leave Encashment Amount, along with Tax-exempt portion, Taxable portion, Tax on the taxable portion and Daily rate used.
Formula used
Encashment = Monthly basic + DA ÷ 30 × Leave days
- Exemption (private) = least of actual amount, ₹25 lakh, 10 months' average salary, and leave at 30 days per year of service
- Average salary = average basic + DA of the last 10 months
Some companies use 26 days instead of 30 for the daily rate.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Average Monthly Basic + DA, Last 10 Months (₹) | 60,000 |
| Earned Leave Days to Encash | 150 |
| Daily Rate Basis | Monthly salary ÷ 30 |
| When Encashed | On retirement or resignation – private employee |
| Completed Years of Service | 20 |
| Your Income Tax Slab | 30% |
| Result | Value |
|---|---|
| Leave Encashment Amount | ₹3,00,000 |
| Tax-exempt portion | ₹3,00,000 |
| Taxable portion | ₹0 |
| Tax on the taxable portion | ₹0 |
| Daily rate used | ₹2,000 |
Tips for using the Leave Encashment Calculator
- Check your company's policy on maximum leave accumulation and encashment.
- The ₹25 lakh limit applies across your whole career, including amounts from earlier employers.