How leave encashment is calculated
Leave encashment = days encashed × a day's pay. Most policies use basic plus DA ÷ 26 or ÷ 30; some use gross. Encashment during service is taxable as salary; on leaving, private-sector employees can claim exemption up to ₹25 lakh over their career, subject to conditions. Leave encashment explained.
Frequently asked questions
Is leave encashment on basic or gross?
Whatever your leave policy says. Basic plus DA is the most common.
Why 26 days?
Many policies count 26 working days in a month (excluding Sundays). Others use 30.