Computing the Encashment

This leave encashment calculator starts from monthly basic salary plus dearness allowance, divides by 30 for the daily rate, and multiplies by unused leave days — capped at 300 for exemption purposes. The result is the gross amount owed to the employee.

The Four-Part Exemption

Under Section 10(10AA), the exempt portion is the least of the actual amount, 10 months' average salary, the cash equivalent of 30 days for each completed year of service, and ₹25,00,000. At retirement all four apply; at resignation only the actual amount and the statutory cap matter.

Planning the Tax

Encashment is taxed as salary income in the year received, at your marginal slab rate. Knowing the taxable portion up front lets you plan advance tax or time the encashment across financial years when that is an option.