Leave Encashment Calculator on Resignation 2026
Calculate your earned leave encashment payout on resignation or retirement. See gross amount, Section 10(10AA) tax exemption (₹25L limit), and net in-hand for private and government employees.
Employee Type
Basic Salary (Monthly ₹)
₹
Basic pay only — exclude HRA and allowances
Dearness Allowance (DA %)
%
Most private IT companies have 0% DA — enter 0 if not applicable
Earned Leave Days to Encash
Leave Days
days
Leave Encashment Payout
Gross Payout
₹50,010
Net (After Tax)
₹50,010
Fully tax-free — within exemption limit
Monthly Salary (Basic + DA)
₹50,000/month
Daily Rate (Salary / 30)
₹1,667/day
Gross Encashment (30 days)
₹50,010
Tax Exemption (Sec 10(10AA) — least of actual, 10 months, ₹25L)
₹50,010
Net Payout
₹50,010
10 months salary cap: ₹5,00,000. Statutory limit: ₹25,00,000. Exemption = least of actual, 10 months, and ₹25L (lifetime across employers).
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What determines your tax-free amount and when you get paid.
₹25L tax-free limit (revised 2023)
The Section 10(10AA) exemption for private employees was raised from ₹3L to ₹25L in May 2023. This is a lifetime limit across all employers — keep records of exemptions claimed to avoid double-claiming.
Government employees: 100% exempt
Central and state government employees receive full tax exemption on leave encashment — there is no upper limit. The entire encashment amount is tax-free regardless of how large it is.
Paid as part of Full & Final
Leave encashment is settled along with unpaid salary, gratuity, and other dues in your Full & Final (F&F) settlement — typically processed within 30–45 days of your last working day.
Example: Basic ₹50,000/month, 0% DA, 30 earned leave days (private)
Monthly salary (Basic + DA) = ₹50,000. Daily rate = ₹1,667. Gross encashment = ₹50,000. Exemption = least of ₹50,000 (actual), ₹5,00,000 (10 months), and ₹25,00,000 (limit) = ₹50,000. Result: fully tax-free. You receive ₹50,000 with no TDS deducted.
Leave Encashment Quick Reference
Payout at ₹50,000 basic, 0% DA, private sector.
10 leave days
₹16,667
15 leave days
₹25,000
20 leave days
₹33,333
30 leave days
₹50,000
45 leave days
₹75,000
60 leave days
₹1,00,000
90 leave days
₹1,50,000
All tax-free (within ₹25L lifetime limit at ₹50K basic)
Section 10(10AA) Exemption Rules
Government employees
Fully exempt — no limit
Private (retirement/death)
Fully exempt — no limit
Private (resignation)
Exempt up to ₹25L lifetime
10 months salary cap
Also applies as an additional cap
Lifetime limit
Cumulative across all employers
Amount above ₹25L
Taxable as salary income
Frequently Asked Questions
Leave encashment rules, tax, and F&F settlement
How is leave encashment calculated on resignation?
Leave encashment = (Basic + DA) / 30 × earned leave days. Example: Basic ₹50,000 + DA ₹5,000 = ₹55,000 monthly. Daily rate = ₹55,000 / 30 = ₹1,833. For 30 leave days: gross = ₹55,000. Private employees get a tax exemption under Section 10(10AA) on the lesser of actual, 10 months' salary, or ₹25 lakhs.
Is leave encashment on resignation taxable?
For private employees: partially taxable. You get a Section 10(10AA) exemption on the least of (a) actual encashment, (b) 10 months' Basic+DA, or (c) ₹25L lifetime limit. Government employees are fully exempt. Any amount above the exemption is taxed as salary at your marginal rate.
What is the ₹25 lakh leave encashment exemption?
The government revised the Section 10(10AA) exemption from ₹3L to ₹25L in May 2023 for non-government employees. This is a lifetime limit across all employers — if you claimed ₹10L exemption at a previous company, you have ₹15L remaining at the next. Keep records of exemptions claimed.
Can I use earned leaves to adjust against notice period?
This depends on your employer's HR policy. Some companies allow leave adjustment against notice period, shortening the effective notice you must serve. This is separate from leave encashment — leaves adjusted against notice are not paid out. Always get written approval from HR.
What salary is used for leave encashment — full CTC or basic?
Leave encashment uses Basic Salary + Dearness Allowance (DA) only. HRA, conveyance, medical allowances, and variable/special pay are excluded. For most private IT employees who have no separate DA, use only the basic salary.
When is leave encashment paid — before or after joining a new company?
Leave encashment is part of your Full & Final (F&F) settlement, paid by your old employer after your last working day — typically within 30–45 days. You do not need to wait for F&F before joining your new employer. The F&F amount is credited to your last registered bank account.
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