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Leave Encashment Calculator
Leave encashment = (monthly salary ÷ days in the month used as divisor) × leave days encashed. Which salary components and which divisor to use depends on company policy.
Work out the payout for unused leave days when an employee leaves or when leave is encashed under your policy.
What you enter
- Monthly salary used for encashment
- Days in the month used as divisor
- Leave days to encash
How the Leave Encashment Calculator works
- Per-day rate = monthly salary ÷ divisor.
- Leave encashment = per-day rate × leave days encashed.
Worked example: Monthly salary ₹45,000, divisor 30, 12 days encashed
- Per-day rate = 45,000 ÷ 30 = ₹1,500.
- Leave encashment = 1,500 × 12 = ₹18,000.
Assumptions to keep in mind
- Which salary components count (basic only, or basic + DA, or gross) and whether the divisor is 26, 30 or the calendar month is a matter of company policy. Set those in the inputs.
Figures last reviewed November 2026. Rates and limits change, so check the official sources below.
Frequently asked questions
How is leave encashment calculated?
Divide the monthly salary used for encashment by the divisor (commonly 26 or 30) to get a per-day rate, then multiply by the leave days.
Which salary is used for leave encashment?
Policies differ: some use basic only, some basic + DA, some gross. Follow your company policy and employment contract.
Is leave encashment taxable?
It can be taxable as salary, with exemptions in some cases such as on retirement. Check the Income Tax Department guidance or ask a tax adviser.
Sources
Let Lumos HRMS do this for every employee
Lumos HRMS calculates attendance-based pay with PF, ESI and other statutory deductions for the whole team. See payroll
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