Leave encashment calculator
Estimate the value of unused leave paid out in service or at exit.
Most policies encash on basic + DA; some use gross. Use the base your leave policy specifies.
Leave encashment
₹32,000
Encashment during service is taxable as salary. On retirement or resignation, a non-government employee's encashment is exempt up to the least of the statutory limits, with a lifetime cap of ₹25 lakh. Indicative only.
How it works
Leave encashment pays an employee for unused earned leave, either during service (if the policy allows) or at exit. The amount is usually the daily rate of basic + DA multiplied by the days encashed; the daily rate uses 30 or 26 days depending on policy.
Encashment during service is fully taxable. At retirement or resignation, a non-government employee's encashment is exempt up to the least of several limits, with an overall cap of ₹25 lakh.
Formula
- Per-day rate = monthly basic + DA ÷ 30 (or 26, per policy)
- Encashment = per-day rate × leave days encashed
Worked example
Basic + DA ₹40,000, 24 days, 30-day month
- Per-day rate: ₹40,000 ÷ 30 = ₹1,333.33
- Encashment: ₹1,333.33 × 24 = ₹32,000
Common mistakes to avoid
- Using gross when the policy says basic + DA, or the reverse.
- Encashing leave types the policy does not allow to be encashed.
- Treating in-service encashment as tax-exempt.
- Leaving encashment out of the full and final settlement.
Leave encashment calculator: FAQs
Is leave encashment mandatory?
Encashment of unused earned leave at exit is common and required by many state laws for covered establishments. Encashment during service depends on company policy.
Is leave encashment taxable?
During service, yes. At retirement or resignation, non-government employees get an exemption up to the least of the statutory limits, capped at ₹25 lakh over their working life.
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