Leave Encashment Calculator
Work out leave encashment on exit and the tax-free part under section 19 of the Income-tax Act, 2025. Estimates only. Rules checked 2 Nov 2026.
The salary your employer uses to pay leave encashment, as per your appointment letter or leave policy.
Your company policy decides this. Check your leave policy.
Capped at 30 for the tax limit.
Leave encashment
₹2,00,000
₹60,000 ÷ 30 × 100 days = ₹2,00,000
- Tax-free part
- ₹1,60,000
- Taxable part
- ₹40,000
The four limits (the smallest is the tax-free part)
- Limit (a): leave balance for tax × daily rate (smallest)
- ₹1,60,000
- Limit (b): 10 × average monthly salary
- ₹6,00,000
- Limit (c): ₹25,00,000 minus leave encashment already tax-free
- ₹25,00,000
- Limit (d): amount received
- ₹2,00,000
₹25,00,000 is the limit notified under the Income-tax Act, 1961 (CBDT Notification 31/2023). A notification under the Income-tax Act, 2025 has not been found yet; check before you file.
Limit (a) is worked out at average monthly salary ÷ 30 per day.
Leave balance counted for limit (a): 80 of 80 days (30 days a year × 10 years, minus 220 used).
Notes
- Leave encashment while still in service is fully taxable. These limits apply when you leave, whether on retirement or resignation.
- Payment timeline: under the OSH Code, unused earned leave is paid within two working days of quitting or discharge, and within two months of retirement or death.
Leaving a job? Estimate your full and final settlement.
Questions about leave encashment
Sources
- Income-tax Act, 2025 - section 19, Table, Sl. No. 13 and 14 - Income Tax Department
- CBDT Notification No. 31/2023 (24 May 2023), Income-tax Act, 1961
- Occupational Safety, Health and Working Conditions Code, 2020 - s.32 - India Code