Leave Encashment Calculator
Find out how much of your encashed leave is tax-exempt, based on your employment context and accumulated leave balance.
Leave Encashment
₹0 taxable · ₹40,000 exempt
Why Context Matters So Much
Leave encashment is one of the few salary components where tax treatment depends almost entirely on circumstances rather than a flat rule. The exact same amount of money can be fully tax-free for a retiring government employee, partially taxable for a retiring private-sector employee, and fully taxable for someone encashing leave simply because they're switching jobs. It's worth checking which bucket applies to you before assuming any particular tax treatment.
Frequently Asked Questions
Is leave encashment taxable?
It depends on context. Government employees get full tax exemption on retirement. Private-sector employees get exemption on retirement up to certain limits — the lowest of a lifetime cap, actual amount received, 10 months' average salary, or cash value of accumulated leave. Leave encashed while still employed (not at retirement) is fully taxable for everyone.
What is the lifetime exemption limit for leave encashment?
The current statutory cap is ₹25,00,000, applied across your entire career — not per employer or per year. If you've already claimed exemption on a previous leave encashment, that amount counts against this lifetime limit.
How many leave days can I encash?
This depends entirely on your employer's leave policy — some cap accumulation at a certain number of days, others allow carrying forward more. The tax exemption calculation separately caps the leave balance counted at 30 days per year of actual service completed.
Does leave encashment appear in Form 16?
Yes, taxable leave encashment is included as part of your salary income in Form 16. The exempt portion (if any) should be reflected separately and won't be added to your taxable salary figure.