Leave Encashment Calculator
Calculate the monetary value of your unused leave days with our easy-to-use calculator
Calculate Your Leave Value
Enter your details to compute your leave encashment
Understanding Leave Encashment
What is Leave Encashment?
Leave encashment refers to the process where an employee can convert their unused leave days into monetary compensation. This policy allows employees to receive payment for accumulated leave days that they haven’t utilized during their employment period.
How is Leave Encashment Calculated?
The formula for calculating leave encashment is:
This calculation determines the per-day value of an employee’s compensation and multiplies it by the number of unused leave days.
Benefits of Leave Encashment
- Provides financial benefit for unused leave days
- Acts as an additional source of income
- Reduces liability for employers when employees accumulate excessive leave
- Offers flexibility for employees who may not need time off
- Can be particularly valuable during financial emergencies
Important Considerations
- Tax implications vary by country and may have exemptions up to certain limits
- Company policies differ regarding maximum leave that can be encashed
- Some organizations allow encashment only at the time of resignation or retirement
- Encashment policies are often governed by employment contracts and labor laws
- Employees should balance between taking time off and encashing leave
When Can You Encash Leave?
Leave encashment policies vary by organization but typically occur in these situations:
- During employment (annual encashment as per company policy)
- At the time of resignation or retirement
- Upon completion of a certain period of service
- During financial emergencies (subject to company policy)
What is Leave Encashment?
Leave encashment is the payment received by an employee for unutilized leave at the time of retirement, resignation, or during service.
Who is eligible for Leave Encashment?
Any salaried employee who has accumulated unused earned/privilege leave is eligible, subject to company policy.
Is Leave Encashment taxable?
Yes, but exemptions under Section 10(10AA) of the Income Tax Act apply.
How much leave can be encashed?
Typically, up to 300 days for government employees. Private companies may have their own policies.
What is the formula for Leave Encashment?
(Basic Salary + DA) × Number of Unused Leave Days ÷ 30
Is the calculator valid for both government and private employees?
Yes, you can select your employment type in most calculators.
How is tax calculated on Leave Encashment?
It depends on your total leave encashment, exemption limits, and income slab.
What is the leave encashment exemption limit?
₹3,00,000 for non-government employees as per current IT rules.
Is there a difference in calculation for resignation and retirement?
Yes, tax exemptions vary depending on the type of exit.
Can encashment be done annually?
Some companies allow annual encashment of excess leaves.
Is earned leave encashment part of the final settlement?
Yes, especially when resigning or retiring.
How many days of leave can be carried forward?
It varies—usually up to 300 days for govt employees.
Does HRA or bonus count in leave encashment calculation?
No, only Basic Salary and Dearness Allowance are considered.
Is leave encashment compulsory?
No, it depends on company policy and employment terms.
How to avoid tax on leave encashment?
Use exemptions, structure your exit, and consult a tax expert.
Can I encash sick leave?
Typically, sick leave is not encashable.
What documents are needed for leave encashment claim?
Salary slips, leave balance certificate, and employment exit form.
What is the time limit for claiming leave encashment?
Usually processed during final settlement; claim timelines may vary.
Does PF apply to leave encashment amount?
No, Provident Fund is not deducted on leave encashment.
Where can I check my leave balance?
On your company’s HR portal or through HR department.
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