Leave encashment calculator · free What is your unused leave worth?
Leave encashment = (basic + DA) ÷ 30 × the days of leave you encash. It's fully taxed if you encash while still working; when you leave or retire, it's tax-free up to the smallest of four limits, capped at ₹25 lakh. Enter your salary and leave balance to see the amount and how much of it is tax-free.
Updated · rules for FY 2026-27 (AY 2027-28)
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Your details
If it changed recently, use the average of your last 10 months.
Most companies divide by 30. Some use 26 working days, which pays a little more.
Leave encashment
₹60,000
45 days at ₹1,333 a day · 60 thousand rupees
All of it is tax-free. It's within every limit.
The four limits — the lowest one is tax-free
The per-day rate for the tax limits always uses 30 days, as the law does, whatever your company uses to pay you.
How to use the Leave Encashment Calculator
- Enter your monthly basic pay plus DA.
- Enter the number of leave days to encash, and how the per-day rate is worked out.
- Say whether you're being paid while in service or when you leave, and who your employer is.
- Add your completed years of service and any exemption claimed before.
- See the encashment amount and how much of it is tax-free under section 10(10AA).
Worked example
You're leaving a private company after 8 years with 45 days of earned leave, on a basic plus DA of ₹40,000 a month. These are the figures the calculator opens with.
₹40,000 ÷ 30 × 45 days = ₹60,000
All four limits are at least that much, so the whole ₹60,000 is tax-free. With a much larger balance of 300 days, the sums change:
| Leave encashment received | ₹4,00,000 |
| ₹25 lakh, less any claimed before | ₹25,00,000 |
| 10 months' average salary | ₹4,00,000 |
| Unused leave, at most 30 days a year of service | ₹3,20,000 |
| Tax-free (the smallest) | ₹3,20,000 |
| Taxable, added to salary | ₹80,000 |
Only 30 days a year count towards the exemption, so with 8 years of service at most 240 days are tax-free. Encashed while still in the job, the full amount would be taxable.
How it's calculated
Your company pays you a day's salary for each day of leave you encash. A day's salary is usually your basic pay plus DA divided by 30; some companies divide by 26 working days instead.
Leave encashment = (basic + DA) ÷ 30 × leave days
When it's tax-free
Leave you encash while you're still working is taxed as salary. Leave encashed when you leave or retire is tax-free up to the smallest of four limits:
- The amount you actually receive.
- ₹25 lakh, across your whole career. Anything claimed with earlier employers counts against it.
- 10 months of your average salary.
- Your unused leave, counting at most 30 days for each year you worked there, at your average daily salary.
Government employees don't have these limits: leave encashment on retirement is fully tax-free for them. The exemption works under both the new and old tax regimes.
Rules used: section 10(10AA) of the Income-tax Act, 1961, with the ₹25 lakh limit for non-government employees notified from 1 April 2023. The calculator uses your current salary as the average salary; strictly, it's the average of the 10 months before you leave.
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