Calculate your leave encashment amount and the tax-exempt portion under Section 10(10AA), at retirement or resignation.
For non-government employees, the exempt amount is the least of these four figures:
Government employees receive full exemption with no cap, so this least-of-four test doesn't apply to them.
No. Leave encashment received during your employment (e.g. an annual year-end encashment of excess leave) is always fully taxable. The Section 10(10AA) exemption only applies to leave encashment received at retirement, resignation, or separation from service.
For non-government (private sector) employees, the exemption is capped at ₹25 lakh — raised from ₹3 lakh in 2023. This is a lifetime aggregate limit across all employers, not a per-employer or per-year limit.
Yes. Central and state government employees receive full tax exemption on leave encashment at retirement with no upper limit. The ₹25 lakh cap applies only to non-government (private sector, PSU, etc.) employees.
A maximum of 30 days of leave per completed year of service counts toward the "cash equivalent of leave" calculation, even if you have more unused leave accumulated — excess leave beyond this cap doesn't increase the exempt amount, though your employer may still pay it out.
The ₹25 lakh limit is a lifetime aggregate across your entire career. If you already claimed, say, ₹10 lakh of exemption at a previous job, only ₹15 lakh of headroom remains for any future employer's leave encashment payout.
When you retire or resign, any leave encashment you receive can be partially or fully tax-exempt depending on your salary, years of service, and unused leave balance. This calculator applies the official least-of-four test under Section 10(10AA) to estimate exactly how much of your payout is tax-free.
This calculator is for illustration only. Verify your exact figures with your employer's HR/payroll team, especially regarding any exemption already claimed at previous employers, since the ₹25 lakh limit is a lifetime aggregate.
