Leave Encashment Calculator

See what your unused leave is worth and how much of it is exempt from tax.

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Leave Encashment Calculator

Amount and tax-free part on leaving a job

Pay and leave

Average monthly salary

₹

Average of the 10 months before you leave: basic + DA (if it counts) + commission on turnover.

Leave days encashed

days

Years of service here

yrs

Earned leave already taken

days

Leave you used during service.

Amount the employer pays

₹

Leave at 0 to use salary ÷ 30 × days.

Exemption already claimed earlier

₹

From past years or other employers; counts against the ₹25 lakh limit.

Leave encashment amount₹4,00,000₹3,333 a day (salary ÷ 30)

Tax-free part₹4,00,000

Taxable part₹0added to your salary income

Limit that appliedAmount actually received

The four limits (the least is exempt) (4 rows)

Limit	Amount (₹)
Amount actually received	4,00,000
Unused leave (up to 30 days a year of service) × average salary	4,00,000
10 months' average salary	10,00,000
₹25 lakh limit less earlier exemption	25,00,000

How it works

When you leave a job with unused earned leave, your employer may pay you for it. This is leave encashment. On retirement or leaving, part or all of it can be tax-free; the rest is taxed as salary.

Amount = average salary ÷ 30 × days = ₹1,00,000 ÷ 30 × 120 = ₹4,00,000.
Tax-free = the least of: Amount actually received (₹4,00,000); Unused leave (up to 30 days a year of service) × average salary (₹4,00,000); 10 months' average salary (₹10,00,000); ₹25 lakh limit less earlier exemption (₹25,00,000).
Exempt ₹4,00,000, taxable ₹0.

Use the average of your last 10 months of pay, not just the last month.
Leave already taken reduces the leave that counts for the exemption.
If you change jobs often, earlier exemptions count towards the same ₹25 lakh limit.

Sources: PIB press release of 25 May 2023, "Increased limit for tax exemption on leave encashment for non-government salaried employees notified" (limit raised from ₹3 lakh to ₹25 lakh from 1 April 2023, aggregate across employers) and the Income Tax Department's Retirement Benefits page on incometaxindia.gov.in (least of: amount received; unused earned leave × average monthly salary, with credit up to 30 days per year of service; 10 months' average salary; ₹25,00,000). Central and state government employees receive full exemption on retirement. The rule sits in section 10(10AA) of the Income-tax Act, 1961; the Income-tax Act, 2025 (in force from 1 April 2026) re-numbers it, so check the new section number on the department's site. Tests check each of the four limits in turn.

Preparing tool

How to use Leave Encashment Calculator

Choose government, private (on leaving) or encashment during service.
Enter average monthly salary, leave days, years of service and leave already taken.
Read the amount, the tax-free part, the taxable part and which limit applied.

Read the detailed guide →

What are the limits of Leave Encashment Calculator?

Covers encashment on retirement or leaving only; tax on the taxable part depends on your slab and regime, so it is not calculated. Average salary means basic plus DA (if it counts for retirement benefits) and commission on turnover; check your employer's figure. Not tax advice. Nothing you enter leaves your device.

Limit

Amount (₹)

Amount actually received

4,00,000

Unused leave (up to 30 days a year of service) × average salary

4,00,000

10 months' average salary

10,00,000

₹25 lakh limit less earlier exemption

25,00,000