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Leave Encashment for Central Government Employees

December 29, 2019 admin Leave a Comment

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.

Leave Encashment on Retirement Calculations
Select Pay Matrix Level
Select Basic Pay
Select DA %
Enter EL (No of Days)
Enter HPL (No of Days)

7th CPC Leave Encashment

The 7th Central Pay Commission has recommended in its report (Page No. 365) as follows…

Earned Leave (EL) or Leave on Average Pay (LAP)

9.2.13 Presently 30 days EL per annum is granted to Civilian employees and 60 days to Defence personnel. EL can be accumulated up to 300 days in addition to the number of days for which encashment has been allowed along with LTC. Suggestions have been made to increase the accumulation to 450 days, allow encashment of 50 percent of the accumulated EL after 20 years of service and delink encashment of leave from LTC. A novel concept of “gifting” has been put forward, wherein employee should be allowed to ‘gift’ certain number of days of leave to one’s spouse or one’s colleague. “Vacational” staff like teachers, principals, etc. have demanded restoration of 10 days EL, which was changed to 20 days Half Pay Leave by VI CPC.

Analysis and Recommendations in 7th CPC Report

9.2.14 In many organizations, employees are encouraged to take leave on the premise that it revitalizes them and is beneficial for the organization in the long run. Such a system is not prevalent in the government sector in India, but substituting leave with cash is also not desirable. Hence, no change in encashment guidelines is recommended.

9.2.15 The Commission recognizes that Earned Leave is, as the name suggests, earned by an employee through the services rendered. Hence, it is personal to the employee and the concept of “gifting” cannot be considered.

9.2.16 The demand of “Vacational” staff can, however, be agreed to. Hence, it is recommended that “Vacational” staff be granted 10 days EL in place of 20 days Half Pay Leave. Other than this no other change is recommended.

Half Pay Leave (HPL) or Leave on Half Average Pay (LHAP)

9.2.21 Presently, government employees are entitled to 20 days of Half Pay Leave for each completed year of service, credited @10 days on the 1st of January and 1st of July every year. There are representations that encashment of HPL should be allowed at the time of superannuation.

Analysis and Recommendations in 7th CPC Report

9.2.22 The demands lack merit. Elsewhere in the report it has been recommended that 20 days HPL granted to “Vacational” staff be converted into 10 days EL. Hence, HPL will henceforth not be available to them. No change other than this is recommended.

Leave Encashment permitted at the time of retirement:

  • 4th Pay Commission: 240 days
  • 5th Pay Commission: 300 days
  • 6th Pay Commission: 300 days*

*Excludes 60 days EL encashment during LTC

Enhancement of ceiling of Earned Leave for purposes of Leave Encashment

10.1.44 The Commission has received representations seeking raising the ceiling limit of 300 days to 450 days for purposes of Leave encashment.

Analysis and Recommendations in 7th CPC Report

10.1.45 The Commission notes that based on the recommendations of the VI CPC, serving employees are entitled for encashment of Earned Leave up to 60 days while in service. This is not to be deducted from the maximum number of Earned Leave of 300 days encashable at the time of retirement. The VI CPC, therefore, has further liberalised the regime of leave encashment.

10.1.46 The recommendations in relation to pay of both the civilian and defence forces personnel will also lead to a significant increase in the pay drawn and therefore in the total amount of leave encashment available for an employee. Therefore raising the present ceiling of 300 days is not recommended by the Commission.

How is earned leave encashment calculated while retirement?

The amount of leave encashment will be calculated as follows:

Earned Leave Calculation Formula

  • [(Basic Salary + DA) / 30] x No of days

Hal Pay Leave Calculation Formula

  • [(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
1 35400 6018 41418 414180
2 36500 6205 42705 427050
3 37600 6392 43992 439920
4 38700 6579 45279 452790
5 39900 6783 46683 466830
6 41100 6987 48087 480870
7 42300 7191 49491 494910
8 43600 7412 51012 510120
9 44900 7633 52533 525330
10 46200 7854 54054 540540
11 47600 8092 55692 556920
12 49000 8330 57330 573300
13 50500 8585 59085 590850
14 52000 8840 60840 608400
15 53600 9112 62712 627120
16 55200 9384 64584 645840
17 56900 9673 66573 665730
18 58600 9962 68562 685620
19 60400 10268 70668 706680
20 62200 10574 72774 727740
21 64100 10897 74997 749970
22 66000 11220 77220 772200
23 68000 11560 79560 795600
24 70000 11900 81900 819000
25 72100 12257 84357 843570
26 74300 12631 86931 869310
27 76500 13005 89505 895050
28 78800 13396 92196 921960
29 81200 13804 95004 950040
30 83600 14212 97812 978120
31 86100 14637 100737 1007370
32 88700 15079 103779 1037790
33 91400 15538 106938 1069380
34 94100 15997 110097 1100970
35 96900 16473 113373 1133730
36 99800 16966 116766 1167660
37 102800 17476 120276 1202760
38 105900 18003 123903 1239030
39 109100 18547 127647 1276470
40 112400 19108 131508 1315080

Encashment Leave Rules and Orders:

  • Pending payment of encashment of Earned Leave and Half Pay Leave for BSNL VRS Retirees October 19, 2020
    The payment of leave encashment was required to be completed latest by 14.08.2020, which was further extended up to 05.09.2020 in respect of retirees under BSNL VRS-2019 – BSNL Corporate ...
  • Immediate settlement of pending issues in respect of retired employees under BSNL VRS 2019 September 11, 2020
    Immediate settlement of pending issues in respect of retired employees under BSNL VRS 2019 – BSNL Orders issued on 3.9.2020 BHARAT SANCHAR NIGAM LIMITED (A Government of India Enterprise) CORPORATE OFFICE Establishment Cell Bharat Sanchar ...
  • Payment of leave encashment in respect of VRS-2019 optees whose Vigilance clearance is withheld May 9, 2020
    Payment of leave encashment in respect of VRS-2019 optees whose Vigilance clearance is withheld – BSNL Order dated 6.5.2020 Also Check: Leave encashment of Central Government Employees BHARAT SANCHAR NIGAM LIMITED (A Government ...
  • Leave Encashment for Central Government Employees December 29, 2019
    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. ...
  • Leave encashment to officers appointed on contract in various posts under Government – DoPT June 21, 2019
    Leave encashment to officers appointed on contract in various posts under Government – DoPT “The officers who are appointed on contract in various posts under the Central Government will be allowed ...
  • Clarification in respect of encashment of Earned Leave to reemployed pensioners – DoPT July 4, 2017
    Clarification in respect of encashment of Earned Leave to reemployed pensioners – DoPT No.14028/1/2017-Estt(L) Government of India Ministry of Personnel, Public Grievances and Pensions Department of Personnel & Training Old JNU Campus, New Delhi 110 ...
  • Cabinet approved leave encashment up to 180 days to Defence personnel April 19, 2017
    Cabinet approved leave encashment up to 180 days to Defence personnel Cabinet approved leave encashment up to 180 days in respect of those Defence personnel who died or were invalidated out ...
  • 7th Pay Commission Report on Leave Encashment of EL December 12, 2015
    7th Pay Commission Report on Leave Encashment of EL Enhancement of ceiling of Earned Leave for purposes of Leave Encashment The Commission has received representations seeking raising the ceiling limit of 300 days ...
  • IBA Clarification on Paternity Leave, Encashment on LFC, Re-fixation of Pay and Special Allowance July 28, 2015
    IBA Clarification on Paternity Leave, Encashment on LFC, Re-fixation of Pay and Special Allowance ALL INDIA BANK EMPLOYEES’ ASSOCIATION Singapore Plaza, 164, Linghi Chetty Street, Chennai – 600001 CIRCULAR No.27/120/2015/31 To ALL UNITS AND MEMBERS: 27th July, 2015 Dear ...
  • Encashment of earned leave alongwith LTC – Clarification issued by Dopt February 9, 2015
    Encashment of earned leave alongwith LTC – Clarification issued by Dopt G.I., Dep. of Per. & Trg., O.M.No.14028/2/2012-Estl(L), 9.2.2015 Subject: Encashment earned leave alongwith LTC- clarification. The undersigned is directed to refer to ...
  • One time relaxation in Rules for leave encashment during service January 12, 2015
    One time relaxation in Rules for leave encashment during service – Permission for leave encashment to Railway Employees who have failed to avail leave encashment during the previous blocks. RBE No. ...
  • One time relaxation for leave encashment during service: Railway Board Order December 24, 2014
    Railway Board Orders on one time relaxation in Rules for leave encashment during service – Permission for leave encashment to Railway Employees who have failed to avail leave encashment during ...
  • Timely payment of dues of encashment of leave to Government servants retiring on attaining the age of superannuation… October 25, 2013
    Timely payment of dues of encashment of leave to Government servants retiring on attaining the age of superannuation — need to obviate delays in payment of such dues No. 18019/6/2013-Estt(L) Government of ...

Calculation Method with Formula for Encashment of Leave

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 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 of retirement. The simple formula to calculate the lump sum amount of encashment…

Encashment for CG Employees

At the time of 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

LTC Cash Voucher Scheme Online Calculator 2020

A simple online calculator for finding the maximum amount to avail complete cash benefit from this Special Cash Package Scheme on Leave Travel Concession. [Click to calculate]

What is leave encashment in govt services?

Encashment of Leave is the regular process in Government Services. Every Govt employee can surrender his saved leave for encashment. He/she will get the amount of salary according to the number of leave days.

How many days can save Earned Leave (EL)?

A Central Government employee can save a maximum of 300 days of Earned Leave (EL) can save in his account.

How to calculate Leave Encashment in Central Govt Services?

The amount of Leave Encashment will be calculated as follows…
Basic salary plus Dearness Allowance is divided by 30. The result multiplied with a number of days EL (Maximum 300 days). If any shortfall in EL, then take the Half Pay Leave for calculation subject to not exceeding 300 days.

What is the formula for calculating encashment of earned leave?

The below calculation formula for calculating encashment of earned leave for Central Government employees. (Basic Salary + Dearness Allowance) / 30] x No of EL. [Click to view in detail]

What is the formula for calculating encashment of Half Pay Leave?

The below calculation formula for calculating encashment of Half Pay Leave for Central Government employees. [(Half Pay Leave Salary + Dearness Allowance) / 30] x No of HPL. [Click to view in detail]

Is Leave Encashment while on retirement taxable?

Leave salary received at the time of retirement (at the time of Leaving Service) is not taxable in any respect of amount. Leave salary received during previous year (before retirement) is taxable.
Grant of accumulation and encashment of 300 days of earned leave for Defence and other Industrial employees – Dopt Order dated 7.11.2006

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Related updates:

    7th Pay Commission Report on Leave Encashment of EL
    Whether Encashment of Leave is Allowed After LTC is Availed?
    Leave encashment to officers appointed on contract in various posts under Government – DoPT
    Pending payment of encashment of Earned Leave and Half Pay Leave for BSNL VRS Retirees
    7th CPC Recommendations on Encashment and Accumulation of Earned Leave
    Clarification in respect of encashment of Earned Leave to reemployed pensioners – DoPT
    Timely payment of dues of encashment of leave to Government servants retiring on attaining the age of superannuation…
    Encashment of earned leave alongwith LTC – Clarification issued by Dopt
    Encashment of EL on Joining Central Govt to PSUs

Filed Under: Leave Encashment

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