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SKAG and Associates
Chartered Accountants

Leave Encashment Calculator

Compute leave encashment value with tax exemption indication.

The Leave Encashment Calculator computes leave encashment payable on retirement or resignation and indicates the tax exemption under Section 10(10AA) of the Income Tax Act, 1961 (Section 19 of the Income Tax Act, 2025 from Tax Year 2026-27). Tax treatment differs for government and non-government employees. It is for employees planning an exit and for employers and HR teams preparing full and final settlements.

Use the Leave Encashment Calculator

Leave Encashment

Per-day wages₹ 0
Total encashment amount₹ 0
Tax exempt amount₹ 0
Taxable as salary₹ 0
Per-day wages = (Average monthly salary × 12) / 360 (or similar formula for private). Average is of last 10 months immediately preceding retirement.

Generated on 17 October 2026 at skagandassociates.com — for information only, not professional advice

Compute leave encashment payable on retirement / resignation. Different tax treatment for government vs non-government employees under Section 10(10AA) of the Income Tax Act, 1961 (Section 19 of the Income Tax Act, 2025 from Tax Year 2026-27, where it is a deduction from salary).

Tax treatment under Section 10(10AA) (Section 19 of the 2025 Act from Tax Year 2026-27):
  • Government employees: Entire amount fully exempt from tax.
  • Non-government employees at retirement / resignation: Exempt to the extent of LEAST of (i) actual amount received, (ii) Rs 25,00,000 less any exemption claimed earlier (lifetime limit), (iii) 10 months' average salary, (iv) cash equivalent of leave at credit, counting at most 30 days for each completed year of service.
  • On death: Entire amount exempt to legal heirs.
  • During service: Entire amount is taxable as salary.
  • Statutory cap: Rs 25,00,000 for non-government employees, for retirement on or after 1 April 2023 (raised from Rs 3,00,000 by Notification 31/2023 dated 24 May 2023). It is a lifetime limit across employers.
  • Days at credit: For the exemption, leave at credit is counted at no more than 30 days for each completed year of service.
  • Labour Codes: Under the OSH Code (in force 21 November 2025) a worker (not managerial / supervisory staff) may carry forward up to 30 days of annual leave; leave above that at the end of the calendar year is encashed, and unused leave is paid on retirement, resignation or termination (Section 32).
Important note: This tool provides an indicative output only. It does not factor in every special provision, surcharge, exception, or recent notification. Verify with the firm before acting on any computation.

Frequently Asked Questions

Is leave encashment taxable?
Leave encashment received during service is fully taxable as salary. On retirement or resignation, government employees get a full exemption, while non-government employees get an exemption under Section 10(10AA) (Section 19 of the Income Tax Act, 2025 from Tax Year 2026-27) up to the least of four limits, including a cap of Rs 25 lakh. Leave encashment received by legal heirs on an employee's death is fully exempt.
What is the leave encashment exemption limit for private employees?
For non-government employees, the exemption on retirement or resignation is the least of the actual amount received, Rs 25 lakh (raised from Rs 3 lakh with effect from 1 April 2023, and reduced by any exemption claimed earlier), 10 months' average salary, and salary for the leave at credit calculated at up to 30 days for each completed year of service. The balance is taxable as salary.
How does the leave encashment calculator work?
Enter the employee type, occasion, average monthly salary for the last 10 months, days encashed and years of service. The tool divides monthly salary by 30 to get a daily rate and multiplies it by the days encashed. It then applies the exemption rules for the chosen occasion to split the amount into exempt and taxable portions.

Due in the next 30 days

Labour
  1. ESI Half-yearly Return of Contributions (Apr–Sep 2026)In 25 days · Labour
  2. PF deposit (ECR + challan) for OctoberIn 29 days · Labour
  3. ESI contribution for OctoberIn 29 days · Labour

Full compliance calendar → Statutory dates, which can be extended by notification. General information only.

Published by SKAG and Associates, Chartered Accountants, New Delhi · Proprietor CA Gaurav Singh (ICAI M.No. 539050). General information only, not professional advice.

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