Private-sector employees face the trickiest leave encashment tax: the exempt amount is the LEAST of four limits (₹25L statutory cap, 10 months salary, leaves earned at 30/year x average salary, actual amount received). The calculator computes all four and picks the lowest as your exempt portion.
When to use this
Use when leaving a private-sector job at retirement / resignation: estimate the tax exemption on accumulated leave encashment, plan retirement timing to maximize exempt amount (more leave balance = more exempt), calculate effective post-tax leave-encashment receipt.
Frequently Asked Questions
Why is the exemption complex for private employees?
Govt employees get full exemption (no tax). Private employees got a fixed ₹3L cap historically, raised to ₹25L in Budget 2023. The 4-limit rule prevents abuse - exemption is the LEAST of (₹25L cap, 10 months salary, ₹500 x earned leaves, actual amount).
Powered by Leave Encashment Calculator.