Leave Encashment Exemption Calculator
Accurately calculate your tax-free leave encashment at retirement or resignation under Section 10(10AA). Applies the updated ₹25 Lakh statutory exemption limit for non-government employees with full 4-test formula breakdown.
Employee & Encashment Details
The ₹25,00,000 statutory limit is a cumulative lifetime ceiling across all employers.
Tax Exemption Summary
Section 10(10AA) 4-Test Breakdown (Least is Exempt)
This calculation is an estimate for informational purposes and does not constitute formal tax advice. Government employees enjoy full exemption under Sec 10(10AA)(i). Non-government employees are exempt to the least of the statutory 4 tests.
Frequently Asked Questions
Everything you need to know about Leave Encashment tax exemption under Section 10(10AA) of the Income Tax Act.
What is the revised tax exemption limit for leave encashment for private employees?
Vide CBDT Notification No. 31/2023 dated 24th May 2023, the maximum statutory limit under Section 10(10AA)(ii) for non-government employees was increased from ₹3 Lakhs to ₹25 Lakhs with effect from 1st April 2023 (FY 2023-24 onwards).
Is leave encashment received during continuing employment tax-free?
No. Leave encashment received while continuing in service is fully taxable as "Salary" in the year of receipt under Section 17(1) for all employees (both government and non-government). Section 10(10AA) exemption applies only upon retirement, resignation, or termination.
Are government employees completely exempt from tax on leave encashment?
Yes. Under Section 10(10AA)(i), any amount received as leave encashment at the time of retirement or superannuation by Central or State Government employees is 100% exempt from income tax without any monetary ceiling.