# Leave encashment calculation **URL:** \ **Category:** HR\ **Created:** [November 24, 2020, 11:16am UTC](https://community.greythr.com/t/leave-encashment-calculation/1415 "2020-11-24T11:16:26Z")\ **Posts on this page:** 3\ **Page:** 1
**Author:** ![Nanjappatrust](https://avatars.discourse-cdn.com/v4/letter/n/e56c9b/32.png) [@Nanjappatrust](https://community.greythr.com/u/Nanjappatrust)\ **Post date:** [November 24, 2020, 11:16am UTC](https://community.greythr.com/t/leave-encashment-calculation/1415/1 "2020-11-24T11:16:26Z")
Hi First time we are introducing EL encashment benefit to our employees. I would like know whether EL encashment is calculated on Basic + DA or on Gross salary. ---
**Author:** ![Ankit](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/ankit/32/1201_2.png) [@Ankit](https://community.greythr.com/u/Ankit)\ **Post date:** [November 24, 2020, 11:25am UTC](https://community.greythr.com/t/leave-encashment-calculation/1415/2 "2020-11-24T11:25:11Z")
Ideally, Encashment to be provided on Basic+DA ---
**Author:** ![Dinesh](https://avatars.discourse-cdn.com/v4/letter/d/a8b319/32.png) [@Dinesh](https://community.greythr.com/u/Dinesh)\ **Post date:** [November 25, 2020, 3:34am UTC](https://community.greythr.com/t/leave-encashment-calculation/1415/3 "2020-11-25T03:34:33Z")
Hi @Nanjappatrust You can use this formula: Leave Encashment Amount = (Basic + DA)/26 \* No of encashment days) The tax exemption would be minimum of the below 4 points: 1. Amount received as leave encashment – Rs 5 Lakhs 2. Maximum cap as stated by government – Rs 3 Lakhs 3. Last 10 months average basic salary & dearness allowance before leaving the job – Rs 2,10,000 (Rs 21000 X 10) 4. Cash equivalent of the leave balance, subject to maximum of 30 days for each completed year of service – Rs 2,87,000 (as per calculation below)