Leave Encashment Calculator
Get a quick estimate of what your unused leave is worth, or add the tax exemption rules to see how much of it you keep when you leave a job.
1Your salary and leave
Earned or privilege leave only. Casual and sick leave cannot be encashed.
30 is the most common. Check your offer letter or leave policy.
Estimate, not tax advice. The exemption follows Section 10(10AA) of the Income-tax Act, 1961 (Section 19 of the Income-tax Act, 2025 from 1 April 2026): the least of the amount received, 10 months' average salary, the value of unavailed leave and what is left of the ₹25 lakh lifetime limit. Your employer's policy and a chartered accountant have the final word.
Leave encashment, explained
How is leave encashment calculated?
Per-day rate = monthly Basic + DA ÷ days in the month (30 is the most common; some employers use 26 or 22). Leave encashment = per-day rate × leave days encashed. Check your offer letter or leave policy for the divisor your employer uses.
Is leave encashment taxable?
Leave encashed while you are still working is fully taxable as salary. When you retire or resign, the exemption under Section 10(10AA) of the Income-tax Act, 1961 may apply. From 1 April 2026 the same rule is in Section 19 of the Income-tax Act, 2025.
How much is exempt for a private-sector employee?
The least of four amounts: the leave encashment you receive; 10 months' average salary (Basic, DA and commission on turnover); the value of your unused earned leave (at most 30 days for each completed year of service, minus leave already used); and what is left of the ₹25 lakh limit.
Is the ₹25 lakh limit per employer?
No. It is a cumulative limit over your working life. Relief you claimed earlier, with this or any earlier employer, reduces what is left. Changing jobs does not reset it.
Are Government employees treated differently?
Yes. Central and State Government employees are fully exempt on leave encashment at retirement or resignation. Employees of PSUs, public-sector banks and government-owned companies are generally treated as non-government employees.
What if the leave is paid to a legal heir?
Leave encashment received by a legal heir after the employee's death is fully exempt.
Which salary counts for the 10-month average?
The 10 months just before you leave: Basic salary, Dearness Allowance (where it counts for retirement benefits) and commission that is a fixed percentage of turnover. Bonus, HRA, overtime and other variable allowances are generally not included.