Leave encashment calculator
The most common formula: one day of basic + DA for every unused leave day, with a 30-day month. Your policy may differ; the notes below cover the variations.
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How encashment is usually computed
Payout = (monthly basic + DA ÷ days in a month) × unused leave days.
- Most policies encash earned or privilege leave only; casual and sick leave usually lapse.
- Some companies use 26 working days instead of 30 as the divisor, which raises the per-day rate.
- On exit, encashment is typically part of the full and final settlement along with pending salary and gratuity.
ZekoHR tracks balances per leave type with carry-forward rules, so the unused-days number is never in dispute at exit time. See how leave works →
Common questions
Is leave encashment taxable?
Encashment during service is generally taxable as salary. On retirement or leaving, non-government employees have an exemption up to a statutory limit, currently ₹25,00,000 aggregate, computed under Section 10(10AA) rules. This is general information, not tax advice.
Which leave types can be encashed?
That is a policy decision. Most companies encash earned or privilege leave only, while casual and sick leave lapse. Your company policy and applicable state rules decide.
Why do some companies divide by 26 instead of 30?
Dividing monthly pay by 26 working days gives a higher per-day rate than dividing by 30 calendar days. Both conventions exist; your policy should say which one applies.