Most calculators stop at the encashment amount. This one also computes exactly how much is tax-exempt under Section 10(10AA) — the ₹25 lakh limit, the 10-month average rule, and the 30-day-per-year leave cap, all applied together.
| Exemption test (least of these applies) | Amount |
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For non-government employees, the exempt amount is the least of: the actual leave encashment received, ₹25,00,000 (lifetime limit across all employers), 10 months' average salary (basic+DA), and the cash equivalent of leave at credit — capped at 30 days of leave per completed year of service. Central and state government employees get full exemption at retirement, no cap.
Yes, fully. Section 10(10AA) exemption applies only to encashment received on retirement, resignation, or termination — a genuine "separation" from the employer. Leave encashed while you're still on the payroll (common as an annual policy at some companies) is added to your salary and taxed at your normal slab rate, with no special exemption.
₹25,00,000, effective from 1 April 2023 (CBDT notification, later applied retrospectively by courts to earlier years too). This replaced the older ₹3,00,000 limit that had stood since 2002. It's a lifetime aggregate limit — if you've claimed exemption with a previous employer, that amount reduces what's left for this one.
That's decided by your employer's leave policy and your state's Shops & Establishments Act, not the Income Tax Act. The 30-days-per-year figure in this calculator is only one of the four tests used to compute the tax exemption — your employer may let you encash more or fewer days than that.
The FnF Settlement Calculator gives your complete final payout — pending salary, leave encashment, gratuity, and notice recovery — in one number. This tool goes deeper on leave encashment specifically, to show what portion of it is tax-free.
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