Is leave encashment considered a taxable income component?

Created by Product Content Team, Modified on Wed, 13 Mar at 5:15 PM by Product Content Team


Leave encashment refers to the practice of converting accumulated unused leave or vacation days into monetary compensation.  


The taxability of leave encashment days depends on the country's tax laws and regulations. 

In India, leave encashment is taxable as per the income tax laws. The tax treatment varies based on factors such as the reason for encashment (retirement, resignation, etc.) and whether it is received during employment or at the time of separation from the organization.


Click here to subscribe to our help videos

Related Links:

Video - To watch the Income Tax video, click here.

FAQs - To read more FAQs about Income Tax, click here.

Documentation - To read more about Income Tax, click here.

Product Update - To read about the product update, click here.





Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article