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Financial Calculator

Leave Encashment Calculator - India 2025

Calculate leave encashment amount on retirement or resignation with tax implications and encashment rules as per Indian labor laws.

₹
₹
0 days500 days
1 year40 years

Tax Exemption Available

Up to ₹3 lakh or 10 months average salary is tax-exempt on retirement

Net Encashment Amount

₹3,33,333

After tax on 200 leave days

Gross Amount
₹3,33,333
Tax Exemption
₹3,00,000
Per Day Rate
₹1,667

Encashment Breakdown

Accumulated Leaves
200 days
Encashable Leaves
200 days
Daily Rate (Basic + DA)
₹1,667
Gross Encashment
₹3,33,333
Tax Exemption
-₹3,00,000
Estimated Tax
-₹0
Net Amount
₹3,33,333
Private Sector Rules
Max encashable: 200 days
Encashment type: Retirement
✓ Tax exemption applicable

Accurate Calculations

Calculate precise leave encashment amount based on current salary, accumulated leaves, and sector-specific rules.

Tax Optimization

Understand tax exemptions available on retirement and calculate net encashment amount after taxes.

Policy Compliance

Compare government vs private sector encashment rules and maximum eligible days.

Essential Leave Encashment Tips

Expert guidance to maximize your leave encashment benefits and tax planning

Know Your Leave Balance

Maintain accurate records of your accumulated leave. Only earned leave (not casual or sick leave) is typically eligible for encashment. Maximum encashable days vary by company policy.

Understand Tax Implications

Leave encashment on retirement is partially tax-exempt (up to ₹3 lakh or 10 months average salary). However, encashment during service or resignation is fully taxable.

Check Company Policy

Different organizations have varying leave encashment policies. Government employees typically can encash up to 240 days on retirement, while private sector policies vary widely.

Plan Your Timing

Consider encashing leave when your salary is lower to minimize tax impact. Retirement encashment has better tax benefits compared to encashment during active service.

Frequently Asked Questions about Leave Encashment

Get answers to common questions about leave encashment policies, tax implications, and eligibility

What is leave encashment and who is eligible?

Leave encashment is the monetary compensation for accumulated but unused earned leave. All employees who have accumulated earned leave are generally eligible, though specific rules vary by organization and sector (government vs private).

How is leave encashment calculated?

Leave encashment = Number of encashable leave days × Per day salary. Per day salary is calculated as (Basic Salary + DA) ÷ 30. The maximum encashable days depend on company policy and employment sector.

What are the tax implications of leave encashment?

Leave encashment on retirement is partially tax-exempt up to ₹3 lakh or 10 months average salary, whichever is lower. Leave encashment during service or on resignation is fully taxable as salary income and subject to TDS.

What's the maximum leave I can encash?

For government employees: up to 240 days (8 months) on retirement, 90 days on resignation. For private sector: varies by company policy, typically 30-300 days depending on years of service and company rules.

Can I encash leave during active service?

Yes, many organizations allow periodic leave encashment during service, typically once a year. However, there's usually a minimum leave balance requirement and maximum encashable days per year as per company policy.

Is leave encashment mandatory for employers?

Leave encashment is not mandatory under Indian labor laws but depends on company policy, employment contract, or applicable service rules. Government employees have statutory rights to leave encashment on retirement.

What happens to unutilized leave on resignation?

This depends on company policy. Some companies allow encashment of accumulated leave on resignation, while others may not. The encashment amount, if allowed, is fully taxable as salary income.

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