Free payroll tool
Leave encashment calculator for India
Estimate leave encashment for unused leave days during exit settlement or year-end payroll. Use your company's wage base, divisor, and leave cap policy.
What the estimate includes
- Monthly basic plus DA wage base
- Unused leave days eligible for encashment
- 26-day or 30-day divisor policy
- Optional cap on payable leave days
This calculator is for planning. Final leave encashment depends on company policy, employment terms, state rules, and tax treatment.
Estimated payout
Daily wage used
₹2,000
Monthly basic + DA divided by 30
Payable leave days
18 days
No policy cap applied
Estimated leave encashment
₹36,000
Before tax treatment and policy-specific deductions
What this means
At ₹2,000 per day for 18 payable leave days, estimated leave encashment is ₹36,000 before tax and settlement adjustments.
How leave encashment is calculated
Most teams start with the salary component allowed by policy, often basic salary plus DA. Divide that monthly amount by the policy divisor, then multiply by the unused leave days that can be encashed.
The tricky part is usually not the formula. It is the inputs: the approved leave balance, policy cap, exit date, and whether the payout is monthly, yearly, or part of full-and-final settlement.
What HR teams should check
- Leave type eligible for encashment, such as earned leave or privilege leave.
- Approved leave balance after pending applications and attendance corrections.
- Salary component and divisor defined in the leave policy.
- Maximum leave accumulation or encashment cap.
- Tax treatment before payroll is finalised.
Related payroll calculators
For exit settlements, you may also need the gratuity calculator. For monthly deductions, use the PF calculator.
Leave encashment FAQs
How is leave encashment calculated?+
A common estimate is monthly basic salary plus DA divided by the policy divisor, multiplied by encashable leave days. Your company policy may use a different wage base or cap.
Is leave encashment calculated on gross salary?+
Many organisations calculate leave encashment on basic salary plus DA, not full gross salary. Check the leave policy and employment terms before final settlement.
What divisor should I use for leave encashment?+
Companies commonly use 26 or 30 depending on policy and wage practice. Use the divisor your payroll policy uses for leave encashment.
Is leave encashment taxable?+
Tax treatment depends on employee type, timing, exemption limits, and current income tax rules. Treat this calculator as a payout estimate, not a tax calculation.
Can EasyHR track leave balances for encashment?+
EasyHR helps teams manage leave balances, attendance, payroll inputs, approvals, and employee records so exit or year-end leave encashment is easier to verify.
Need accurate leave balances before payroll?
Talk to EasyHR about leave management, attendance, payroll, and employee records for your organisation.
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