Leave Encashment Calculator
Find the value of unused earned leave and the likely tax-exempt part when an employee leaves.
How to use the free Leave Encashment Calculator
- Enter your figures in the fields above – use real numbers from your PMS, channel manager or accounts.
- Tap the button to see the result instantly. Change any value to compare scenarios.
- Copy, print or save the result and use it in your daily or monthly review.
This Leave Encashment Calculator runs fully in your browser on mobile or desktop – no sign-up and nothing is uploaded. Free leave encashment calculator for hotels. Value unused leave on basic + DA with a 26 or 30 day divisor and check the ₹25 lakh tax exemption limit.
What leave encashment means
Leave encashment is the payment an employee receives for earned or privilege leave that was not taken. Many hotels allow it once a year for a limited number of days, and almost all pay it in the full and final settlement when someone leaves. Because hotels work through weekends, festivals and peak seasons, unused leave builds up quickly, so it is worth knowing the cost before it lands in one payroll.
Example: a sous chef with basic + DA of ₹30,000 leaves with 45 days of earned leave. With a 30-day divisor one day is worth ₹1,000, so encashment is ₹45,000. With a 26-day divisor it is ₹51,923, so the divisor in your policy matters.
Which divisor should you use?
- 30 treats every calendar day as paid, which is common for monthly-salaried staff.
- 26 uses working days and gives a higher value per day. Some state rules and company policies use it.
- Write the divisor and the salary base (basic + DA or gross) into your leave policy and apply it the same way for everyone.
Tax treatment (non-government employees)
- Encashment while still in service is fully taxable as salary.
- On retirement or leaving, part of it is exempt under section 10(10AA). The exempt amount is the lowest of the actual amount, ₹25 lakh, 10 months of average salary, and leave value calculated at no more than 30 days for each completed year of service.
- The ₹25 lakh limit applies across the whole career, not per employer.
Rules change — verify with your CA/HR advisor. The figures here are estimates, not tax advice.
Good practice for hotels
- Keep a monthly leave balance for every employee and share it on the payslip.
- Plan leave in low season using the staff duty roster generator, so balances do not pile up.
- Set a clear carry-forward limit in the appointment letter.
Frequently asked questions
How is leave encashment calculated?
Divide the monthly basic plus DA by 30 or 26, as your policy states, and multiply by the number of unused leave days being encashed.
Is leave encashment taxable?
Encashment during service is taxable. On retirement or leaving, non-government employees get an exemption up to the lowest of several limits, with an overall cap of 25 lakh rupees. Verify with your CA.
Should I use 26 or 30 days for leave encashment?
Use whatever your leave policy, appointment letter or state rule specifies. Thirty is common for monthly-paid staff; 26 gives a higher daily value.
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