Leave encashment: days into money
Unused earned leave and last drawn salary in: the payout estimate out, with the wage basis shown so you can check it against your policy's actual divisor.
Your inputs
The payout
On exit, encashment is tax-exempt up to notified limits (fully exempt for government employees; capped for others; verify the current cap when you exit). In-service encashment is fully taxable.
The three numbers that decide your payout
Encashment is balance × daily wage, but all three inputs hide policy detail. The balance is what the system says accrued minus what you took; check it in self-service before resigning, because it is part of your exit value. The wage basis is usually basic + DA, not gross, and the divisor matters: ₹26,000 ÷ 26 pays ₹1,000 a day while ÷ 30 pays ₹867, an 15% gap the policy decides. And the cap: many policies limit encashable days (30 is common), with the excess lapsing. On exit the result joins the full and final settlement beside gratuity and notice adjustments, with the exempt and taxable portions itemised.
The accrual rules, carry-forward caps and leave-type distinctions behind the balance live in the leave policy guide; how encashment nets into an exit is in the full & final settlement page.
A worked example
18 days of EL at ₹26,000 basic + DA on a ÷26 policy: daily wage ₹1,000, payout ₹18,000 in the settlement. The same balance under a 15-day encashable cap pays ₹15,000 with three days lapsing, which is why checking the cap before your last leave application matters: taking three days of leave before exit beats donating them. A colleague on the identical salary but a ÷30 policy receives ₹15,600 for the full 18: the divisor, set years ago in a policy document, just priced a week's difference.
Figures are illustrative; your policy's basis, cap and the current tax exemption limits govern the real payout.
Frequently asked questions
Which leave types can be encashed?
Earned/privilege leave is the encashable type; casual and sick leave conventionally lapse. Your policy's carry-forward cap and encashable-days cap bound the payout, both are inputs above.
What wage is encashment computed on?
Usually last drawn basic + DA divided by 26 or 30 per the policy, not gross. The divisor alone moves the payout 15%, which is why the calculator makes it explicit.
Is the payout taxable?
On exit, encashment is exempt up to the currently notified limits (fully for government employees, capped for others) with the excess taxed as salary; verify the current cap at exit. In-service encashment is fully taxable.
Should I use leave or encash it before resigning?
Check the cap: days beyond the encashable cap lapse unpaid, so taking them as leave beats donating them. Days within the cap are a timing choice — encashment pays at your latest (highest) wage.
Where does this fit in my final settlement?
As its own line in the full and final settlement, beside unpaid salary, gratuity and any notice recovery, computed from your recorded balance, with exempt and taxable portions itemised.
Balances tracked live, settlements computed.
PeopleDeck carries every balance into the FnF automatically — per employee, per month.
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