🇮🇳 Leave Encashment Calculator India
Leave Encashment Calculator India – Calculate Unused Leave Payout
Calculate your unused leave encashment amount online with HR Niti's free Leave Encashment Calculator India. Enter your eligible salary, unused leave days and your employer's calculation basis (26 vs 30 days) to estimate leave payout, tax-exempt amount under Section 10(10AA), and potential taxable amount instantly.
Calculate Your Leave Encashment
Use the calculator below to estimate the value of your unused eligible leave and its tax exemption breakdown.
Enter the monthly salary component used by your employer for leave encashment.
What Is Leave Encashment?
Leave encashment means converting eligible unused paid leave into money instead of taking the leave. Employees in India may receive leave encashment when they:
Not every type of leave is automatically eligible for encashment. Eligibility depends on the company's leave policy, employment terms, and applicable law or service rules. For most organizations in India, earned leave (EL) or privilege leave (PL) is the primary leave category considered for encashment, while casual leave or sick leave usually lapse.
How Is Leave Encashment Calculated?
A commonly used leave-encashment formula in India is:
Where the eligible monthly salary is commonly based on Basic Salary + Dearness Allowance (DA), depending on the employer's policy and applicable rules.
Many payroll calculations use 30 as the divisor (calendar days basis), while some organizations or specific rules use 26 (working days basis). HR Niti's calculator allows you to select the applicable dividing factor rather than assuming one value applies to every employer.
Leave Encashment Formula & Worked Example
Formula:
Worked Example:
Suppose an employee has:
- Basic Salary + DA = ₹45,000 per month
- Unused eligible leave = 20 days
- Dividing factor = 30
Per-day salary: ₹45,000 ÷ 30 = ₹1,500 per day
Encashment payout: ₹1,500 × 20 = ₹30,000
Estimated Leave Encashment = ₹30,000. The final amount can differ if your employer uses a different salary basis, divisor, leave category, or encashment rule.
Why Does the 26 vs 30 Divisor Matter?
The dividing factor directly changes the value of each leave day. For example, with an eligible monthly salary of ₹45,000 and 20 eligible leave days:
This creates a difference of ₹4,615 for the exact same leave balance! That is why you should use the divisor specified by your employer's leave policy or applicable service rules.
How to Use the Leave Encashment Calculator
Select When Leave Is Encashed
Choose whether the leave is encashed during active service, at resignation, or at retirement.
Select Employee Category
Choose between Private / Non-Government and Government Employee.
Enter Your Monthly Salary
Enter your monthly Basic Salary plus Dearness Allowance (DA) used for leave encashment.
Enter Eligible Leave Balance
Enter unused leave days actually eligible for cash payout under company policy.
Select Dividing Factor
Choose 30 days (standard calendar) or 26 days (working days) per employer policy.
Calculate Payout & Tax
Instantly view Estimated Leave Encashment, Tax-Exempt Amount, and Taxable Amount.
Which Leave Can Be Encashed?
Not every leave type is treated in the same way. Organizations commonly distinguish between:
Earned Leave / Privilege Leave
This is the primary leave category eligible for encashment across Indian companies upon resignation, retirement, or carry-forward caps.
Casual Leave (CL)
Casual leave is often subject to use-it-or-lose-it rules and is generally not encashable under standard corporate leave policies.
Sick Leave (SL)
Sick leave usually has separate carry-forward and lapse rules, and is rarely eligible for cash encashment unless mandated by specific service rules.
Earned Leave Encashment Example
If an organization allows earned leave encashment with ₹40,000 eligible salary, 25 leave days, and 30 divisor:
Calculation: ₹40,000 ÷ 30 × 25 = ₹33,333 estimated payout.
Leave Encashment on Resignation
When an employee resigns, eligible unused leave is calculated and included in the Full & Final (F&F) settlement statement.
Example: Basic+DA = ₹50,000, 18 leave days, 30 divisor → ₹30,000 F&F payout.
Is Leave Encashment Taxable? Tax Exemption under Sec 10(10AA)
The tax treatment of leave encashment depends on the timing of encashment and employee category:
Leave encashment received at retirement or superannuation by Central/State Government employees is 100% fully tax-exempt under Section 10(10AA)(i).
For non-government employees receiving leave encashment on retirement or resignation, tax exemption under Section 10(10AA)(ii) is capped at the maximum statutory ceiling of ₹25,00,000 (₹25 Lakhs) for AY 2026-27.
How Much Is 10, 20, or 30 Days of Leave Worth?
Assuming an eligible monthly salary of ₹45,000 and a 30-day calculation basis (Per-day salary = ₹45,000 ÷ 30 = ₹1,500):
Leave Encashment Reference Table (India)
Illustrative calculations using a 30-day divisor across common monthly Basic + DA salary levels:
| Eligible Monthly Salary | 10 Leave Days | 20 Leave Days | 30 Leave Days |
|---|---|---|---|
| ₹20,000 | ₹6,667 | ₹13,333 | ₹20,000 |
| ₹30,000 | ₹10,000 | ₹20,000 | ₹30,000 |
| ₹40,000 | ₹13,333 | ₹26,667 | ₹40,000 |
| ₹50,000 | ₹16,667 | ₹33,333 | ₹50,000 |
| ₹60,000 | ₹20,000 | ₹40,000 | ₹60,000 |
| ₹75,000 | ₹25,000 | ₹50,000 | ₹75,000 |
| ₹1,00,000 | ₹33,333 | ₹66,667 | ₹1,00,000 |
Leave Encashment in Full & Final Settlement
Leave encashment is often included in the employee's full-and-final settlement upon exit. A typical final settlement includes salary payable, leave encashment, gratuity, variable pay, reimbursements, less deductions and notice adjustments.
Leave Encashment and CTC
Leave encashment is not the same as CTC. CTC represents overall annual employer cost, while leave encashment is a payout associated with eligible unused leave.
Frequently Asked Questions About Leave Encashment
Answers to common questions regarding earned leave encashment, 26 vs 30 divisors, tax limits, and resignation payouts.
Leave encashment is the process of converting eligible unused paid leave balance into a lump-sum monetary payout instead of taking days off. It commonly occurs at resignation, retirement, or during active service if permitted by company policy.
A commonly used leave encashment formula in India is: Leave Encashment = (Eligible Monthly Salary ÷ Dividing Factor) × Eligible Leave Days. The eligible monthly salary is usually Basic Salary + Dearness Allowance (DA).
The standard formula is: (Basic Salary + DA) ÷ Dividing Factor × Unused Eligible Leave Days. A 30-day divisor is commonly used for calendar-day policies, while some employers use a 26-day divisor for working-day policies.
In most Indian companies, leave encashment is calculated on Basic Salary plus Dearness Allowance (DA). Allowances such as HRA, conveyance, and special allowances are usually excluded unless company policy specifies otherwise.
Not necessarily. Gross salary should not automatically be used unless specified by your employer's leave policy or service rules. Most employers use Basic + DA as the eligible salary basis.
Earned Leave (EL) or Privilege Leave (PL) is the primary leave category eligible for encashment. Casual Leave (CL) and Sick Leave (SL) usually lapse at the end of the year and are rarely eligible for cash out under standard company policies.
Yes, but only if your employer's company policy or service rules allow in-service leave encashment. However, leave encashment received during active employment is 100% fully taxable as salary income.
On resignation, unused earned leave is calculated using your last drawn Basic + DA and the applicable divisor (30 or 26). The payout is credited as a component of your Full and Final (F&F) settlement.
At retirement or superannuation, accumulated earned leave is encashed based on eligible leave balance and salary. For tax purposes, retirement leave encashment is eligible for tax exemption under Section 10(10AA).
It depends on when it is received and employee category. Leave encashment received during employment is fully taxable. On retirement/resignation, government employees get 100% tax exemption, while private employees get exemption up to statutory limits.
For non-government private employees receiving leave encashment on retirement or resignation, the maximum tax exemption limit under Section 10(10AA)(ii) is ₹25,00,000 (₹25 Lakhs) for AY 2026-27.
Yes! Leave encashment received by Central or State Government employees at retirement or superannuation is 100% fully tax-exempt under Section 10(10AA)(i) of the Income Tax Act.
Leave encashment is payment for unavailed paid leaves. Gratuity is a statutory exit benefit for long-term continuous service (governed by the Code on Social Security 2020). Both are separate components in an employee's exit settlement.
No. CTC (Cost to Company) represents your annual gross employment package. Leave encashment is an additional payout computed at exit or in-service based on unused leave balance.
Use the divisor specified by your employer's leave policy. A 30-day basis is standard for calendar-day policies, while a 26-day basis is used for working-day policies.
Divide your eligible monthly salary by your company's divisor and multiply by 10. For example, with a ₹45,000 salary and 30 divisor: (₹45,000 ÷ 30) × 10 = ₹15,000.
For an eligible monthly salary of ₹45,000 and a 30-day divisor: (₹45,000 ÷ 30) × 20 = ₹30,000.
For an eligible monthly salary of ₹45,000 and a 30-day divisor: (₹45,000 ÷ 30) × 30 = ₹45,000 (equivalent to one month's Basic + DA).
Yes. Encashment rules, eligible leave caps, carry-forward limits, and calculation divisors vary across organizations and state employment acts.
No. Sick leave usually has separate carry-forward rules and is not automatically encashable under standard corporate policies.
No. Casual leave generally lapses at the end of each calendar year and cannot be carried forward or encashed.
Eligible encashable leave balance is calculated on your last working day and included as a lump-sum credit in your Full and Final (F&F) settlement statement.
Leave Encashment Calculator Methodology
HR Niti's calculator uses the standard formula: Leave Encashment = (Eligible Monthly Salary ÷ Dividing Factor) × Eligible Leave Days, where the eligible salary and divisor are determined according to the selected calculation method. The calculator is intended to provide an estimate. Final leave encashment should be verified using the employer's approved leave balance, applicable salary components, company policy, and relevant legal or service rules.
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