Leave encashment

Unused earned leave usually converts to cash at exit, and sometimes annually. The rate is normally based on Basic + DA rather than gross salary, which is worth checking in your policy.

Leave encashment

(Basic+DA) × leave_days / 30 (or 26).

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How it is calculated

1

Take the accumulated earned leave balance in days.

2

Compute a daily rate from last drawn Basic + DA, ordinarily divided by 30 or by 26 depending on policy.

3

Multiply the daily rate by the leave balance.

Worked example

With 45 days of accumulated leave and Basic + DA of ₹45,000 at a 30-day divisor, encashment comes to ₹67,500.

What to watch for

Frequently asked questions

Is leave encashment taxable?

During employment, yes, fully. At retirement or resignation, non-government employees get an exemption up to a statutory ceiling, with the balance taxable.

Can my employer refuse to encash leave?

Policy governs accumulation and encashment during service, but leave standing to your credit at exit is generally payable.

More Leave & Time calculators

There is an easier way to do this each month.

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