Leave Encashment Calculator (India)

Leave encashment is typically calculated as (Last drawn monthly salary ÷ 30) × Number of unused earned leave days. Salary includes Basic and DA. Some employers use a 26-day working month basis.

At retirement, exemption is available under Section 10(10AA). Government employees get full exemption. Private sector employees get exempt amount up to the least of actual encashment, 10 months average salary, and Rs 25 lakh. Encashment during employment is fully taxable.

For non-government employees at retirement, the maximum exemption is Rs 25 lakh (raised from Rs 3 lakh in Budget 2023), subject to the least-of test with 10 months average salary and actual encashment.

Yes. Leave encashment received by Central and State Government employees is fully exempt from income tax under Section 10(10AA)(i), regardless of the amount.

Last drawn salary means Basic Salary plus Dearness Allowance (DA) immediately before retirement or exit. HRA, transport allowance, and bonuses are generally not included.

Section 10(10AA) exemption applies when leave is encashed at the time of retirement or superannuation. If you encash leave while still employed, the amount is fully taxable as salary.

For non-government employees, one of the limits for tax exemption is average salary of the 10 months immediately preceding retirement. This calculator approximates it as 10 × last drawn monthly salary.

Depends on employer policy. Many organizations allow partial encashment annually or at exit only. Annual encashment during service is taxable. Only retirement encashment qualifies for Section 10(10AA) exemption.

Typically earned/privilege leave can be encashed. Casual leave and sick leave usually lapse and cannot be encashed unless employer policy allows.

The taxable portion is added to your salary income in the year of receipt and taxed at your applicable income tax slab rate under both Old and New Tax Regime.