Leave Encashment Calculator
Leave Encashment Calculator
What your unused leave is worth in cash: leave days × the salary your policy uses (usually basic + DA) ÷ 30 or 26 — on leaving, on retirement or at year end.
Leave encashment amount
45 days of earned leave, basic + DA of $48,000 a month, divisor 30
Leave encashment
- leave days
- the leave at your credit that can be encashed
- monthly salary
- basic + DA, or whatever the rules or policy name, on the date of encashment
- divisor
- 30 (Central Government rules and many employers) or 26 (some employers)
Worked example
45 days of earned leave, basic + DA of $48,000 a month, divisor 30
One day = 48,000 ÷ 30 = $1,600
Encashment = 45 × 1,600 = $72,000
With a 26-day divisor: 45 × 48,000 ÷ 26 = $83,077
Central Government retirement example (7th CPC)
| Item | Amount |
|---|---|
| Basic pay on the date of retirement | $56,100 |
| DA at 60% (from 1 January 2026) | $33,660 |
| Pay + DA | $89,760 |
| 300 days ÷ 30 | $8,97,600 |
How leave encashment is calculated
Leave encashment turns unused paid leave into cash. The sum is simple: the value of one day’s leave — a monthly salary divided by 30 or 26 — times the days encashed. What changes from employer to employer is which salary is used and which divisor. Most rules use basic pay plus dearness allowance (DA); some private policies use basic only, or gross pay. A 26-day divisor, which leaves out weekly offs, makes each day worth more: 45 days on $48,000 is $72,000 at 30 but $83,077 at 26.
Central Government employees. Rule 39 of the CCS (Leave) Rules, 1972 pays, on retirement, the cash equivalent of earned leave and half pay leave at credit, up to 300 days in all, using pay plus DA on the date of retirement divided by 30. At a basic of $56,100 and DA of 60%, 300 days come to $8,97,600. Half pay leave is valued differently under the same rule, so enter only earned leave here.
The Labour Codes. From 21 November 2025, the Occupational Safety, Health and Working Conditions Code, 2020 (section 32) sets annual leave for workers in the establishments it covers: one day for every twenty days worked once you have worked 180 days in a calendar year. Unused leave carries forward only up to thirty days, and the worker may encash unavailed leave at the end of the calendar year; leave due is paid on resignation, discharge, superannuation or death. It applies to “workers” as the Code defines them — managerial and some supervisory staff may fall outside — and a State shops and establishments law or your contract can give more. Read section 32 itself, or ask HR, for how your employer applies it.
Tax. Leave encashment received during service is generally taxed as salary. On retirement or leaving, the Income-tax Act has treated government and other employees differently, with a full exemption for government employees and a capped one for others. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, so check the current provision and limit before relying on any figure; this page shows the amount before tax. Leave is part of the full-and-final settlement with gratuity (see the gratuity calculator) and the last month’s salary; for a day’s pay on a part month see the pro-rata salary calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
What is the formula for leave encashment?
Leave days × monthly salary (usually basic + DA) ÷ 30, or ÷ 26 if your employer uses working days.
How many days of leave can a Central Government employee encash on retirement?
Up to 300 days of earned and half pay leave together, under rule 39 of the CCS (Leave) Rules, 1972, at pay plus DA on the date of retirement ÷ 30 per day of earned leave.
Do the new Labour Codes let me encash leave every year?
Section 32 of the OSH Code, 2020, in force from 21 November 2025, caps carry-forward at 30 days and lets a worker encash unavailed leave at the end of the calendar year. It covers “workers” as the Code defines them; check how your employer applies it.
Is leave encashment taxable?
During service it is generally taxed as salary. On retirement the treatment has differed for government and other employees. The Income-tax Act, 2025 took effect on 1 April 2026, so check the current rules.
Related calculators
References
- Central Civil Services (Leave) Rules, 1972, rule 39(2)(a) (as updated by DoPT to 24 September 2024): on retirement, cash equivalent of leave salary for earned leave and half pay leave at credit, subject to a maximum of 300 days; for earned leave, pay admissible on the date of retirement plus dearness allowance on that pay, × days of earned leave ÷ 30.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), section 32 (annual leave with wages): one day’s leave for every twenty days of work for a worker who has worked 180 days or more in a calendar year; carry-forward to the next year capped at thirty days; encashment of unavailed leave at the end of the calendar year; wages in lieu of leave on discharge, dismissal, resignation, superannuation or death. Summarised in Cyril Amarchand Mangaldas, “Occupational Safety, Health and Working Conditions Code” (client alert, November 2025): “the OSH Code now allows workers to also encash unavailed annual leave at the end of a calendar year”.
- Press Information Bureau, Ministry of Labour & Employment. “Government makes the four Labour Codes effective…”, 21 November 2025: the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code take effect from 21 November 2025, replacing 29 laws.
- Press Information Bureau. “Cabinet approves additional instalment of Dearness Allowance to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01.2026”, 18 April 2026: an increase of 2% over the existing rate of 58% of basic pay/pension, “in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission”; about 50.46 lakh employees and 68.27 lakh pensioners.