Leave Encashment Calculator India 2026 — Free Online
Calculate your leave encashment amount instantly. Compute the value of pending earned leaves at separation or while in service, with tax exemption details.
| Detail | Value |
|---|---|
| Monthly Basic Salary | ₹0 |
| Daily Rate (Basic ÷ Working Days) | ₹0 |
| Pending Earned Leaves | 0 days |
| Leave Encashment Amount | ₹0 |
| 10 Months Average Salary | ₹0 |
| Tax-Exempt Portion (est.) | ₹0 |
How to Use the Leave Encashment Calculator
- Enter your monthly basic salary (not CTC or gross — just the basic component).
- Enter the total number of pending earned/privilege leaves as shown in your leave balance.
- Set working days per month (default 26 for 6-day work week; use 30 if your company uses calendar days).
- Enter your years of service for an accurate tax exemption estimate.
- Click Calculate Leave Encashment to see your encashment amount and estimated tax-exempt portion.
Leave Encashment Formula
Tax Exemption at Separation (Private Sector) = Minimum of:
1. Actual leave encashment received
2. 10 months × Average Basic Salary
3. ₹25,00,000 (₹25 lakh — enhanced in Budget 2023)
Government employees: Full leave encashment exempt.
The leave encashment formula is defined under Section 10(10AA) of the Income Tax Act. The ₹25 lakh enhanced exemption applies to private sector employees with effect from April 1, 2023. Formula reviewed by Vipul Jaganiya, Computer Science expert.
Leave Encashment Calculation Examples
| Employee | Basic/Month | Pending Leaves | Encashment | Tax Exempt? |
|---|---|---|---|---|
| IT Professional (resignation) | ₹55,000 | 24 days | ≈₹50,769 | Yes, full (below ₹25L limit) |
| Factory Worker (retirement) | ₹18,000 | 60 days | ≈₹41,538 | Yes, full |
| Manager (in-service encash) | ₹80,000 | 15 days | ≈₹46,154 | Partially exempt |
* Calculations based on 26 working days/month. Tax exemption at separation subject to Section 10(10AA) limits.
Frequently Asked Questions — Leave Encashment
Leave encashment is the payment received by an employee in lieu of unused earned/privilege leaves. Employees can encash leaves while in service or at the time of resignation, retirement, or during F&F settlement.
Leave encashment = (Basic Salary ÷ 26) × Number of pending earned leaves. For example, if basic is ₹30,000 and you have 15 pending leaves: (30,000 ÷ 26) × 15 = ₹17,308.
For private sector employees at separation, leave encashment is exempt up to the least of: actual amount received, 10 months’ average basic salary, or ₹25 lakh. Government employees get full exemption on leave encashment.
Only Earned Leaves (EL) / Privilege Leaves (PL) can typically be encashed. Casual Leaves (CL) and Sick Leaves (SL) generally lapse at year end and cannot be encashed, though policies vary by employer.
Yes, many companies allow leave encashment while in service — either annually or as a one-time benefit. However, the tax exemption limit during service applies as per Section 10(10AA). The higher ₹25 lakh exemption is available only at retirement/separation.
For private sector employees at separation, leave encashment is tax-exempt up to ₹25 lakh (increased from ₹3 lakh in Budget 2023). The actual exemption is the minimum of the exempt limit, actual encashment received, and 10 months’ average salary.
The divisor 26 represents the average number of working days in a month (excluding Sundays in a 6-day work week). This is the standard practice followed by most employers and is also prescribed in various labour laws.
Under the Factories Act, workers are entitled to 1 day of earned leave for every 20 days of work (about 15 days per year). Under the Shops & Establishments Acts, clerical staff typically get 15–21 days per year. Company policies often vary.