# Leave Encashment Calculator: Tax Exemption up to INR 25 Lakh > Leave encashment calculator: the tax-free part at retirement or resignation, the lowest of four limits including the INR 25 lakh cap and ten months' salary. Source: https://trykosh.com/tools/leave-encashment-calculator Free tool - Income tax # Leave encashment tax exemption calculator When you retire or resign, cash for unused leave can be tax-free up to INR 25 lakh. See how much of yours is exempt. Rules checked 25 October 2026Free - no sign-upRuns in your browser Tax-free part INR 6,40,000 Taxable: INR 0 Exempt **INR 6,40,000** 1\. Amount received INR 6,40,000 2\. Lifetime limit INR 25,00,000 3\. Ten months' average salary INR 8,00,000 4\. Cash value of leave credit (240 days at 30 a year max) INR 6,40,000 Exemption = the lowest INR 6,40,000 This exemption applies to encashment at retirement or resignation. Encashment while still in service is fully taxable. ## Upload your statement and Kosh does this for you. Upload a bank statement or salary slip and Kosh works out your tax under both regimes from your real numbers, finds the deductions you're missing and reminds you before every deadline. [Start free](/signup?via=tool-leave-encashment-calculator) ## How the leave encashment calculator works Leave encashment received while still employed is fully taxable as salary. But encashment received at retirement or resignation is exempt for non-government employees up to the lowest of four limits. The four limits are: the amount actually received; INR 25 lakh, a lifetime cap raised from INR 3 lakh in 2023; ten months' average salary; and the cash value of your leave credit, counting at most 30 days of leave for each completed year of service. 'Salary' here means basic plus DA (and commission at a fixed share of turnover), averaged over the ten months before you leave. Central and state government employees get the full amount tax-free at retirement. The calculator shows each limit and which one applies. ## Worked example: Suresh retires after 18 years Suresh's average basic plus DA over his last ten months was INR 95,000. He encashes 300 days of leave for INR 12 lakh. Ten months' salary is INR 9.5 lakh and his leave credit is worth INR 9.5 lakh too, so INR 9.5 lakh is tax-free and INR 2.5 lakh is taxed as salary. Tax-free part INR 9,50,000 Taxable: INR 2,50,000 Exempt **INR 9,50,000**Taxable **INR 2,50,000** 1\. Amount received INR 12,00,000 2\. Lifetime limit INR 25,00,000 3\. Ten months' average salary INR 9,50,000 4\. Cash value of leave credit (300 days at 30 a year max) INR 9,50,000 Exemption = the lowest INR 9,50,000 This exemption applies to encashment at retirement or resignation. Encashment while still in service is fully taxable. [Load this example into the calculator ->](?avg=95000&years=18&days=300&received=1200000#calculator) ## Good to know - The INR 25 lakh cap is for your whole working life, across employers. If you've claimed the exemption before, only the balance is available. - Encashment from a previous employer and the current one are added together against the cap. - Leave encashment received by your family after your death is not taxable. ## Frequently asked questions Is leave encashment taxable in India? While in service, yes, fully. At retirement or resignation, it's exempt up to the lowest of: the amount received, INR 25 lakh, ten months' average salary, and the cash value of leave earned at up to 30 days a year. Is the leave encashment exemption available in the new regime? Yes. The exemption for encashment at retirement is one of the exemptions the new regime keeps. What is the leave encashment limit for private employees? INR 25 lakh over a lifetime, effective from 1 April 2023. ## Sources and assumptions - [Income Tax Department](https://www.incometax.gov.in/) Rules and rates last checked on 25 October 2026. Results are estimates for planning and education, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting.