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Finance / India Tax
Work out the gross value of encashed leave and how much of it is exempt from tax under Section 10(10AA), for non-government employees.
Gross leave encashment = leave days encashed × (average monthly salary ÷ 30) — a day's pay is approximated as 1/30th of the average monthly salary. The Section 10(10AA) exemption (for non-government employees) is the LEAST of three amounts: (1) that gross encashment amount, (2) 10 months' average salary, and (3) a lifetime aggregate ceiling of ₹25,00,000, raised via Budget 2023 effective April 1, 2023. Simplifications stated explicitly: this calculator uses a flat 30-day-month divisor for the day-rate rather than the exact number of days in each calendar month; and the statutory rule that also caps encashable leave at 30 days per year of service actually served is NOT separately modeled here — this calculator only applies the gross-amount, 10-month-salary, and ₹25L ceiling constraints, in favor of the two dominant, easier-to-verify limits. Government employees receive a full exemption with no ceiling, which this calculator does not model. Figures reflect FY 2025-26 rules.
Yes. Leave encashed while still in service is fully taxable as salary income with no Section 10(10AA) exemption at all. The exemption modeled by this calculator applies specifically to encashment at retirement, resignation, or termination.
The full statutory rule caps how many leave days you can encash to whichever is lower: your actual unused leave, or 30 days for each completed year of service. This calculator omits that second constraint as a stated simplification, modeling only the gross-amount, 10-month-salary, and ₹25L ceiling limits — so for someone with a short tenure but a very large leave balance, this calculator may show a higher exempt amount than the exact statutory result.
No — it's a lifetime aggregate ceiling across all employers, not a per-job or per-year limit. If you've already used part of it at a previous employer, less remains exempt now, which this calculator (evaluating a single encashment in isolation) doesn't track.