Free tool · Income-tax Act 2025
Leave encashmentcalculator.
The cash value of unused earned leave, and how much of it is tax-free when an employee resigns or retires, under the ₹25 lakh limit.
Leave and pay
Leave encashment
₹60,000
₹1,333 a day
Tax-free is the least of
The ₹25 lakh limit₹25,00,000
10 months' average pay₹4,00,000
Leave at 30 days a year of service₹60,000
Amount received₹60,000
Tax
Tax-free₹60,000
Taxable as salary₹0
An estimate for planning, not tax advice. Assumes the leave balance was earned at no more than 30 days a year. Government employees are fully exempt on retirement. Shops & Establishments Acts and your leave policy set how many days can be carried and encashed.
Leave encashment, in plain words
How is leave encashment calculated?
One day's basic + DA (monthly pay divided by 30, or by 26 if the policy counts working days) multiplied by the earned leave days being paid out.
Is leave encashment taxable?
Encashment while still employed is fully taxable. At retirement or resignation, a non-government employee gets it tax-free up to the least of ₹25 lakh, 10 months' average pay, the leave value at 30 days a year, and the amount received.
Which pay counts?
Basic + DA (and commission fixed as a share of turnover). Allowances like HRA are not part of it.
Free · Private · 10 seconds
Track every leavebalance automatically.
360 HRMS keeps earned, casual and sick leave balances for every employee, carries them forward and pays out encashment in the final settlement. Check last month's payroll for free first.
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