Leave Encashment Calculator

About the Leave Encashment Calculator

Leave encashment is the pay for earned leave you did not take. Enter the monthly basic pay + DA, the divisor your leave policy uses (26 working days or 30 days) and the days to encash, and the calculator gives the amount and a day’s pay. Three optional parts go further: the earned leave a worker accrues under the Occupational Safety, Health and Working Conditions Code, 2020 (one day for every 20 days worked, once 180 days are worked; up to 30 days carried forward), when it must be paid after someone leaves, and the tax-free part on retirement or leaving under the Income-tax Act, 2025 — the least of four limits, including the ₹25 lakh lifetime limit.

How the amount is worked out

Leave encashment = (basic + DA a month) ÷ divisor × leave days

• ÷ 26 treats a month as 26 working days (four weekly days off), so a day’s pay is higher; ÷ 30 treats every day of the month as paid. Neither is fixed by law for all employers: use the divisor in your leave policy, standing orders or settlement.
• Enter the pay your policy uses for leave — basic + DA, or the gross salary.
• Half days are paid at half a day’s pay.

Earned leave for workers (OSH Code, s.32)

• A worker who has worked 180 days or more in a calendar year gets one day of leave for every 20 days of work — every 15 days for an adolescent or a worker below ground in a mine (s.32(1)(i)–(ii)).
• Days of lay-off, maternity leave and annual leave taken count towards the 180 days, but no leave is earned for them (s.32(1)(iii)).
• Someone who joined after 1 January qualifies by working a quarter of the days left in the year (s.32(1)(v)).
• Unused leave is carried forward, up to 30 days; leave applied for and refused carries forward without limit (s.32(1)(vii)). The worker can ask for leave to be encashed at the end of the year, and leave above 30 days is encashed (s.32(1)(viii)–(ix)).
• “Worker” leaves out people employed mainly in a managerial or administrative capacity, and supervisors drawing more than ₹18,000 a month (s.2(1)(zzl)). Their leave follows the contract and the State’s shops and establishments law.
• The section covers the Code’s “establishments” — broadly those employing ten or more workers, and every mine and port (s.2(1)(v)); the Government can extend it to others (s.32(2)). In a smaller shop or office, the State’s shops and establishments law and the contract decide the leave.

When it must be paid on leaving

• On discharge, dismissal or quitting, a worker is paid wages in lieu of the leave earned — even without the qualifying 180 days — before the end of the second working day (OSH Code, s.32(1)(vi)(a)). Wages are due within two working days of a resignation or removal too (Code on Wages, 2019, s.17(2)).
• On superannuation or death, within two months — to the heir or nominee on death (s.32(1)(vi)(b)).
• The calculator counts working days from the day after the last day, skipping the weekly days off and the holidays you list.

Tax on leave encashment

Under the Income-tax Act, 2025, s.19(1) Table:

• Central and State Government employees: the whole cash equivalent of the earned leave at credit on retirement is deducted from salary income (Sl. No. 13).
• Everyone else: the deduction is the least of (a) the leave salary for the earned leave at credit — counting at most 30 days for each year of actual service; (b) 10 × the average monthly salary of the ten months before retirement; (c) the amount the Central Government notifies — ₹25 lakh, raised from ₹3 lakh in the Budget 2023-24 — less any amount deducted in earlier years (s.19(2)(f)); and (d) the amount received (Sl. No. 14). Salary is basic pay plus DA where the terms of employment provide for it, without other allowances (s.19(2)(b)).
• Leave encashed while still in service is taxed in full as salary.
• The deduction is available in the new tax regime too: s.202(2) withdraws only Sl. No. 1 (professional tax) of the s.19(1) Table.

The Act speaks of retirement “whether on superannuation or otherwise”; the calculator applies Sl. No. 14 to leave encashed when you leave the job. For a resignation, confirm the treatment with a tax adviser. Limit (a) is worked out at average salary ÷ 30 a day. Notifications made under the 1961 Act continue under the 2025 Act (s.536(2)(j)); the ₹25 lakh is editable in case a new amount is notified.

Sources

• Occupational Safety, Health and Working Conditions Code, 2020 (India Code) — ss.2(1)(v), 2(1)(zzl) and 32
• Code on Wages, 2019 (India Code) — s.17(2)
• Income-tax Act, 2025 — s.19(1) Table, Sl. Nos. 13 and 14; s.19(2)(b) and (f); s.202(2); s.536(2)(j)
• Union Budget 2023-24, Budget Speech, para 151 — the ₹25 lakh limit

Limitations

• Leave policies differ: the base pay, the divisor and the leave a non-worker earns are set by the contract and the State’s shops and establishments law, which this does not model.
• Earned leave is worked out in whole days for every full 20 (or 15) days worked; a policy, award or agreement may give more.
• The tax is the deduction under s.19(1) only; the tax on the rest depends on your income and regime — see the income tax calculator.
• An estimate for information, not legal or tax advice.

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