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Find your leave encashment, the tax-free part and what you can carry forward.
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Leave encashment = (Basic + DA) ÷ 26 × unused earned leave days
| Basic + DA a month | Leave days | At ÷ 26 | At ÷ 30 |
|---|---|---|---|
| Rs 25,000 | 30 | Rs 28,846 | Rs 25,000 |
| Rs 40,000 | 45 | Rs 69,231 | Rs 60,000 |
| Rs 60,000 | 60 | Rs 1,38,462 | Rs 1,20,000 |
| Rs 1,00,000 | 90 | Rs 3,46,154 | Rs 3,00,000 |
| When | Tax |
|---|---|
| While in the job (yearly encashment) | Fully taxable |
| Leaving or retiring, government staff | Fully tax-free |
| Leaving or retiring, private staff | Tax-free up to the lowest of 4 limits |
| Paid to the family after death | Not taxable |
The lowest one is tax-free. This was Section 10(10AA) and is now in Section 19 of the Income-tax Act, 2025, from 1 April 2026. It is allowed in both tax regimes.
From the OSH Code, in force from 21 November 2025. Summary: ZFour. State Shops Acts can add their own rules.
See the full amount with the Full and Final Settlement Calculator and your gratuity with the Gratuity Calculator.
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Leave encashment = (Basic + DA) ÷ 26 × unused earned leave days. Some companies divide by 30. For Rs 40,000 and 45 days at ÷ 26: Rs 69,231.
While in the job, it is fully taxable. On leaving or retiring, it is fully tax-free for government staff and tax-free up to the lowest of 4 limits for private staff, with Rs 25 lakh as the lifetime cap.
Rs 25 lakh in your whole career for private employees, as long as it is within 10 months of average pay and 30 days of leave per year of service.
Yes. The exemption on retirement or resignation is allowed in both the old and new tax regimes.
Usually on Basic + DA. Some company policies use gross. Check your HR policy.
Both are used. 26 days (working days) pays more per day. Your company policy decides.
Up to 30 days. Extra leave can be encashed at the end of the year. You earn 1 day for every 20 days worked, after 180 days of work.
With your full and final settlement, within 2 working days of your last working day under the Code on Wages.
It is taxable, but if it pushes you into a higher slab you can claim relief under Section 89 with Form 10E.
Basic + DA ko 26 se bhaag do aur bachi hui earned leave ke din se guna karo. Naukri chhodte waqt private staff ke liye 25 lakh tak tax-free.