Free calculator · Tax year 2026-27
Leave encashment calculator
What your earned leave is worth in cash, and how much of it is tax-free when you retire or resign. For a non-government employee the tax-free part is the least of four limits, the top one being ₹25 lakh.
Encashment
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Tax-free
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These results are estimates for planning, not tax advice. Your employer's leave policy decides the days and the pay a day is worked on.
Dexta PayDexta Pay does this for every employeeLeave balances from Dexta Time on the last day, encashment in the final settlement, the tax-free part in the year's TDS.How it's worked out
- The value: a day's pay × days. A day's pay is the monthly pay ÷ 26 (common, and Dexta Pay's default) or ÷ 30, whichever your policy uses.
- Tax-free, non-government employees, on retirement or resignation (section 19 of the Income-tax Act 2025, Table Sl. No. 14), the least of: the leave at your credit, at most 30 days for each completed year of service, valued at your average salary; ten months' average salary; ₹25 lakh, less anything tax-free before; and the amount received. "Salary" here is basic + DA (where your terms count DA), averaged over the ten months before you leave.
- The ₹25 lakh limit was raised from ₹3 lakh by CBDT Notification 31/2023, from 1 Apr 2023, and it is a lifetime limit across employers. The 2025 Act's table leaves the figure to a government notification; we use ₹25 lakh, as Dexta Pay does.
- Government employees: fully tax-free on retirement.
- While still in the job: leave encashed during service is taxable as salary in full.
Try Dexta
Final settlements without the spreadsheet.
Dexta Pay takes the leave balance from Dexta Time, works out encashment and gratuity, and puts the tax-free parts into the year's TDS.