Estimate gross leave encashment before tax. Pick a day-basis (26 vs 30) to match how your employer approximates per-day pay from monthly Basic+DA.
Reviewed July 2026 · FY 2026–27 (AY 2027–28) tax slabs in engine · Methodology
Explicit modeling choice
We compute a gross payout estimate only. Net pay after tax/ESI/PT and employer-specific caps are not included.
Changing the day basis can materially change results — pick what matches your payslip policy best (see accuracy card).
Engine snapshot: Basic+DA ₹52,000/month, 8 days, 26-day basis → per-day ₹2,000 → encashment ₹16,000 gross (before tax).
Companies differ. If you don't know, compare both and treat the range as uncertainty, not precision.
Leave encashment is the cash equivalent you receive for unused earned leave (EL) when you leave a job or, in some companies, at the employer's discretion during service. Private-sector employees typically accumulate earned leave at a rate defined by their company's leave policy, often 1–1.5 days per month (12–18 days per year), with a maximum carryforward cap set by the employer.
The per-day rate for encashment is calculated from your Basic + DA (or "basic salary" as defined in the leave policy), divided by either 26 or 30. The 26-day denominator treats a month as 26 working days — a convention common in the Payment of Gratuity Act and some employer policies. The 30-day denominator uses the calendar month. Whichever method your employer uses determines the per-day value of each encashed leave day. This calculator lets you choose the denominator to match your company's policy.
Tax treatment differs by employment type. Central and state government employees receive a specific exemption for leave encashment at retirement, with defined limits under Section 10(10AA) of the Income Tax Act. For private-sector employees, leave encashment received at the time of retirement or resignation is exempt up to certain limits and subject to specific conditions. Encashment during service (while still employed) is generally fully taxable as salary. Given the tax complexity, consult a chartered accountant for significant leave encashment payouts — especially at the time of leaving or retirement.
In your final settlement, leave encashment appears alongside gratuity, last month salary, and notice pay. It is one of the more negotiable components — some companies cap the leave balance that can be encashed, or require you to take leave instead. Understanding the per-day value helps you compare these options.
Indian employment law and company policies recognize several types of leave. Not all of them can be encashed — the rules differ by leave type and by the circumstances of separation (resignation vs retirement vs death in service).
The calculation uses daily salary derived from Basic + Dearness Allowance (not gross):
Encashment = (Basic + DA per month ÷ 26) × Number of Earned Leave Days
The divisor of 26 represents working days in a month under Indian labor convention. Some companies use 30 days instead, which produces a slightly lower per-day figure.
Example: Basic+DA ₹40,000/month, 25 accumulated earned leave days. Encashment = (₹40,000 ÷ 26) × 25 = ₹38,461.
The tax treatment of leave encashment differs sharply depending on how you leave the organization:
Many employees face a choice near resignation: take the remaining earned leave before the last day, or receive encashment. The financial math often favors using leave before quitting: