Calculate encashment amount, Sec 10(10AA) tax exemption and taxable portion at retirement or resignation
Employee Type
🎉
Government Employees — 100% Exempt Leave encashment at retirement is fully exempt under Sec 10(10AA)(i) with no upper limit. Enter details below to compute the encashment amount only.
Salary Details
₹
₹10K₹5L
days
1 day360 days
Exemption Inputs (Private Employees)
years
1 yr40 yrs
days/year
Typically 15–30 days. Used to calculate Condition 4 leave credit.
days
Leave encashed while in service (not at retirement). Reduces Condition 4 balance.
⚠️ FY 2026-27. Sec 10(10AA) exemption: Govt employees — fully exempt (no limit). Private employees — minimum of 4 conditions, capped at ₹25 lakh (lifetime across all employers). Leave encashment during service is fully taxable. Tax calculated at selected slab + 4% cess. Previous exemption claims reduce the ₹25L lifetime limit. Consult a CA for exact computation.
About Leave Encashment Calculator
Leave encashment is a lump-sum payment for unused earned/privilege leave at the time of retirement, superannuation, resignation, or death. For Government employees, leave encashment at retirement is fully exempt under Sec 10(10AA)(i) — no upper limit. For private sector employees, Sec 10(10AA)(ii) exemption is the minimum of: (1) actual amount received, (2) ₹25 lakh notified limit (enhanced from ₹3L in Budget 2023), (3) 10 months' average salary, and (4) leave credit × daily salary (leave entitlement × years − leaves encashed during service). Leave encashment during service (not at retirement) is fully taxable for everyone. The ₹25L limit is aggregate across all employers in a lifetime.
Frequently Asked Questions
What is the ₹25 lakh leave encashment exemption limit? +
Budget 2023 enhanced the exemption limit for private employees from ₹3 lakh to ₹25 lakh under Sec 10(10AA), effective FY 2023-24. This ₹25L is a lifetime aggregate cap across all employers. Government employees remain fully exempt with no limit.
How is leave encashment calculated? +
Leave Encashment = (Basic + DA) ÷ 30 × Leaves Encashed. Only Basic Salary and Dearness Allowance are included. HRA, LTA, Special Allowance and other perquisites are excluded from the formula.
What are the 4 conditions for private employee exemption? +
Exemption = MIN of: (1) Actual leave encashment received, (2) ₹25L notified limit, (3) 10 months' average salary (Basic+DA), (4) Leave credit × daily salary — where leave credit = entitlement per year × completed years − leaves encashed during service. The taxable amount is (actual − exemption).
Is leave encashment during service taxable? +
Yes, fully taxable. Sec 10(10AA) exemption only applies at retirement, superannuation, VRS, or resignation — not for leave encashed while still employed. Leaves encashed during service also reduce the Condition 4 credit for the final retirement encashment.
Does the ₹25L limit reset per employer? +
No. It is a lifetime aggregate. If you claimed ₹10L exemption at a previous employer, only ₹15L is available at the next. The CBDT requires disclosure in Form 10BA for prior exemptions claimed.