Leave encashment calculator
Enter basic pay plus DA and your unused leave. See the encashment amount, and at exit, how much is tax-free and how much is taxable.
- Full and final settlement
- Year-end leave encashment
- Checking a relieving payout
Leave and pay
Leave encashment
General information, not legal or tax advice. Rules change and differ by state; check with your CA or labour consultant before you act. Everything you type stays in your browser.
Made for people like you
How to use it
- Enter basic + DA a month and unused leave days.
- Choose the day rate and whether it is paid at exit or in service.
- At exit, add years of service to see the tax-free and taxable parts.
Good to know
Which pay counts
Encashment is usually paid on basic pay plus DA. Your company's leave policy says whether the day rate is monthly pay ÷ 30 or ÷ 26, and how many days you can encash.
Tax at exit
For non-government employees, the tax-free part at resignation or retirement is the least of: the amount received, ₹25 lakh over your whole career, 10 months' average basic + DA, and leave of up to 30 days for each year of service at that average pay.
Which law
This follows the leave encashment exemption long known as section 10(10AA). The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and section numbers changed, so confirm the current section and limits with your CA.
Tax while in service
Leave encashed while you are still working is fully taxable as salary. Government employees have a separate, fully tax-free rule at retirement, which this tool does not cover.
Final pay timing
Under the Code on Wages, final wages are due within two working days of leaving. Leave encashment is normally part of the full and final settlement.
Questions people ask
Is it free? Do I need to sign up?
Yes, it is free and you do not need to sign up. Open it and use it as often as you like.
Is my data safe?
The numbers are worked out in your browser. Nothing you type is sent to USR unless you choose to email yourself the result.
How accurate is the result?
It is an estimate based on the rules shown on this page as of November 2026, not legal or tax advice. Rules and rates change, so check with your CA before you act.
Is leave encashment taxable?
Encashment while in service is fully taxable. At resignation or retirement, part of it is tax-free up to the limits shown in the tool.
What is the lifetime tax-free limit?
₹25 lakh across all employers for non-government employees. Confirm current rules with your CA.
Leave balances that settle themselves
USR HRMS keeps every leave balance, and USR Payroll (add-on, India, by invitation) adds encashment to the full and final settlement on the same employee record.
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