Sick, casual, and paid leaves are typically separated into these three categories among salaried workers in the employed population. Employees can use their outstanding leave balance or quota when they retire or quit their jobs, thus taking advantage of these accumulated leaves is not compulsory. The guidelines and the leave encashment policy vary from one firm to the next. Although the general thumb rule is that leave balances can be redeemed at the time of retirement or resignation, company policies regarding the complete and final settlement of leave encashment might differ. However, any leave taken while employment is entirely taxed. Nonetheless, under Section 89 of the Income Tax Act, one may request a leave encashment exemption. For employees of the Central or State Government sector, any leave encashment granted at the time of retirement or resignation is completely exempted. Additionally, non-government employees who get leave encashment are partially exempt. Let’s know in brief from industry experts how and when leave encashment is taxable.