Leave Encashment Calculator
Find the amount you will receive and how much of it is tax-free.
This calculator gives an estimate for planning only. Actual amounts depend on your full facts and the law in force. For advice on your situation, talk to us.
How leave encashment is taxed
- While in service: leave encashed during employment is fully taxable as salary.
- Government employees: leave encashment on retirement is fully tax-free.
- Private sector, on retirement or resignation: the tax-free amount is the lowest of (a) the amount received, (b) 10 months' average salary, (c) unused leave, counting at most 30 days for each completed year of service, × average monthly salary ÷ 30, and (d) ₹25 lakh. The ₹25 lakh limit applies across your whole career.
- Average salary means basic pay plus DA (if it counts for retirement benefits) and fixed-percentage commission, averaged over the 10 months before you leave.
- Under the Income-tax Act, 2025 these rules continue unchanged from tax year 2026-27, under new section numbers.
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