Earned Leave (EL / PL) Encashment Calculator
Calculate statutory leave encashment payouts under Section 32 of the Occupational Safety, Health and Working Conditions (OSH) Code, 2020 and the Factories Act. Evaluates 26 vs 30-day divisors, 30-day carry-forward limits, and the ₹25 Lakh lifetime tax exemption under Section 10(10AA).
The 30-Day Accumulation Cap & Mandatory Annual Encashment
Under Section 32(vii) of the OSH Code, 2020, an employee may only carry forward up to 30 days of annual leave to the next calendar year. Any unused leave accumulated in excess of 30 days no longer lapses: the worker has the statutory right to encash the excess leave at the end of the year or on separation.
Leave Encashment Parameters
Configure salary, leave balance, and divisor
📑 Leave Encashment Statutory Audit Worksheet
OSH Code § 32 & Income Tax Act § 10(10AA)
| Statutory Parameter | Formula / Rule | Calculation / Value |
|---|---|---|
|
Monthly Basic + DA Statutory calculation wage base |
Code on Wages § 2(y) | |
|
Per Day Wage Divisor |
||
|
Unavailed Leave Days Accumulated balance of earned/privilege leave |
EL / PL Balance | |
|
Gross Encashment Payout Daily Wage × Leave Balance Days |
Total Entitlement | |
|
Remaining Lifetime Tax Exemption ₹25,00,000 minus prior exemption claimed () |
§ 10(10AA) | |
| Tax-Free Encashment Amount | Tax-Exempt | |
| Taxable Leave Encashment (TDS Applicable) | Subject to Tax |
Avoid Year-End Wage Liability Shocks Under the 30-Day OSH Carry-Forward Rule
Under Section 32 of the OSH Code, leave accumulation beyond 30 days must be encashed annually. High accumulated balances can severely impact company cash flows. Consult our senior labor law advisors to legally restructure leave policies and F&F settlement protocols.
Statutory Framework: How Leave Encashment is Governed in India
Comprehensive legal analysis of the Factories Act, State Shops & Commercial Establishments Acts, and the Occupational Safety, Health and Working Conditions (OSH) Code, 2020.
180-Day Earning Standard
Under Section 32(i) of the OSH Code, an employee qualifies for annual leave with wages after working for 180 days in a calendar year (down from 240 days under the Factories Act, 1948), earning 1 day for every 20 days worked.
₹25 Lakh Tax Exemption
Under CBDT Notification No. 31/2023, the maximum lifetime exemption limit for non-government employees upon retirement or resignation is ₹25,00,000 under Section 10(10AA)(ii). Central and state government employees enjoy unlimited exemption under Section 10(10AA)(i).
In-Service vs Separation Tax
Under Supreme Court rulings, leave encashed while continuing in employment is treated strictly as salary under Section 17(1) and is 100% taxable without any exemption. Only encashment at separation (retirement/resignation) qualifies for Section 10(10AA) relief.