Leave Encashment Calculation in India – Act, Formula, Tax Exemption and Calculator
Leave encashment is one of the huge retirement benefits for the employees working in the Government and Private sector. While retirement, a lump sum amount will get on surrender of leave saved in his entire service.
In the private sector, there is no static calculation method for the encashment of the leave. But, in Government, there will be a formula for calculating the amount of leave encashment. The Central Government has notified the formula to calculate the encashment as per the suggestion of the 7th pay commission. The formula may change for the employees working under state governments.
Encashment for CG Employees
At the time regular retirement, as per the CCS (Leave) Rules Section 39 said, a Government employee is permitted to cash equivalent of leave salary for both Earned Leave (EL) and Half pay leave (HPL) credit on the date of retirement, condition to a maximum of 300 Days to encash.
Maximum of 300 Days Leave Allowed to Encash at the time of regular Retirement for Central Government employees
How to Calculate Leave Encashment
As per the encashment rules, a Central Govt employee can encash a total of 300 days Earned Leave (in case shortage of 300 days in EL, take HPL for balance) at the time retirement. The simple formula to calculate the lump sum amount of encashment…
7th CPC Leave Encashment Calculation
As per Rule 39 of the CCS(Leave) Rules, 1972, a Central Government servant is entitled to the cash equivalent of leave salary for both earned leave and half pay leave at his/her credit on the date of retirement, subject to a maximum of 300 days including the period of encashment allowed in the previous employment under the Central Government. In case a Government servant resigns or quits service, the maximum encashment of leave allowed is 150 days.
How is earned leave encashment calculated while retirement?
The amount of leave encashment will be calculated as follows:
For Earned Leave
- [(Basic Salary + DA) / 30] x No of days
For Hal Pay Leave
- [(Half Pay Leave Salary + DA) / 30] x No of days
7th CPC Recommendations on Encashment and Accumulation of Earned Leave – Click to read more
Earned leave settlement calculation Example: The Encashment Table of 300 days Earned Leave for the pay matrix level – 6 (4200 Grade Pay):
|Earned Leave Encashment Table for 300 Days|
|7th CPC Pay Matrix Level -6 (GP4200)|
|Index||Basic Salary||17% DA||BP + DA||300 EL|
Encashment Leave Orders:
- Payment of leave encashment in respect of VRS-2019 optees whose Vigilance clearance is withheld May 9, 2020
- Leave encashment for Central Government Employees December 29, 2019
- Leave encashment to officers appointed on contract in various posts under Government – DoPT June 21, 2019
- Clarification in respect of encashment of Earned Leave to reemployed pensioners – DoPT July 4, 2017
- Cabinet approved leave encashment up to 180 days to Defence personnel April 19, 2017
- 7th Pay Commission Report on Leave Encashment of EL December 12, 2015
- IBA Clarification on Paternity Leave, Encashment on LFC, Re-fixation of Pay and Special Allowance July 28, 2015
- Encashment of earned leave alongwith LTC – Clarification issued by Dopt February 9, 2015
- One time relaxation in Rules for leave encashment during service January 12, 2015
- One time relaxation for leave encashment during service: Railway Board Order December 24, 2014
- Timely payment of dues of encashment of leave to Government servants retiring on attaining the age of superannuation… October 25, 2013