Leave Encashment: Meaning and Purpose
Leave encashment is the payment an employee receives in exchange for unused leave, usually at exit or at year end. This calculator converts leave days into a rupee amount.
Factors That Affect the Result
- Monthly basic plus DA, or the salary base your policy defines
- Number of encashable leave days
- The divisor used in your leave policy
- Maximum carry-forward or encashment cap
- Tax treatment at retirement versus at exit
How the Leave Encashment Is Calculated
Per-day rate = Monthly basic + DA ÷ Divisor (30, 26 or calendar days)
Leave encashment = Per-day rate × Number of leave days
The divisor and eligible salary components are set by company policy
With a basic plus DA of ₹60,000, a divisor of 30 and 15 days of leave, per-day rate is ₹2,000 and encashment is ₹30,000.
How to Use This Calculator
- 1Enter the values in the fields on the left. Use figures from your payroll or policy.
- 2The result updates instantly as you type. Change any input to compare scenarios.
- 3Copy the result or print it to attach to your records.
- 4Check the notes under the result for statutory limits and policy points that may apply.
Why It Matters
Standardising the formula across employees keeps the full-and-final settlement fair and defensible, and it prevents different managers from using different numbers.
Compliance note: Your leave policy and the applicable state law decide which days can be encashed and the divisor. Use this tool as an estimate.