Leave Encashment Calculator for Govt Employees

Leave encashment at retirement for central government employees in 2026 is calculated as: (Last Basic Pay + DA) ÷ 30 × Number of Earned Leave days. Maximum EL that can be encashed is 300 days. The entire amount is fully exempt from income tax under Section 10(10AA)(i) for government employees. Example: if Basic+DA at retirement is ₹1,50,000/month and you have 285 days of EL, the encashment is ₹1,50,000 ÷ 30 × 285 = ₹14,25,000 — completely tax-free.

The maximum earned leave that can be encashed at retirement for central government employees in 2026 is 300 days. There is no monetary ceiling — the full amount is calculated on the last drawn Basic Pay + DA and is tax-free. At a Basic+DA of ₹2,00,000/month, the maximum leave encashment would be ₹2,00,000 ÷ 30 × 300 = ₹20,00,000. EL accumulates at 30 days per year and can be accumulated up to 300 days. Unused EL beyond 300 days lapes — it is important to monitor your EL balance in the last few years before retirement.

Leave encashment tax treatment differs by type of separation. At retirement or superannuation — fully tax-free for government employees, no limit. On resignation or VRS — for central government employees, leave encashment is exempt up to ₹25 lakh (enhanced limit). For private sector employees, the exemption on resignation is limited to the least of: actual leave encashment, ₹25 lakh, or last 10 months salary, or cash equivalent of unavailed leave at 30 days per year of service. Death in service — entire leave encashment paid to nominee/family is tax-free.

Central government employees earn 30 Earned Leave (EL) days per year — credited at 2.5 days per month. EL can be accumulated up to 300 days (enhanced from 240 days by 7th CPC). If your EL balance reaches 300 days, any further EL earned in that half-year is forfeited. To avoid this, employees should take some leave before reaching the cap. In addition, employees also get 20 Half Pay Leave (HPL) per year, but HPL cannot be encashed at retirement. Casual Leave (8 days/year) also cannot be accumulated or encashed.

Yes, limited leave encashment is allowed while in service. Central government employees can encash up to 10 days of earned leave once in a block of two calendar years while availing Leave Travel Concession (LTC). This is taxable as salary income if done during service. At the time of transfer, up to 10 days of EL can be encashed. During medical leave or quarantine leave, encashment is not allowed. The main leave encashment benefit — where the full amount (up to 300 days) is tax-free — applies only at retirement or superannuation.