How is taxable amount for "leave encashment" calculated?

Leave encashment received by employees during their employment is fully taxable.

However, at the time of retirement, leave encashment received by all government employees is exempt, while for non-government employees, it is exempt to a certain extent.

The amount of such exemption is calculated in lower the following:

• The actual amount received by the employee as leave encashment.​
• The amount specified by the government, which is Rs. 25,00,000 (earlier it was Rs. 3,00,000)
• Unutilized leave credit, calculated as:
  • average salary per day * number of unutilized leave days (maximum allowed leaves per year should not be more than 30 days)
• Average salary for last 10 months.