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|
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|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|
Encashment Leave Rules and Orders:
- Pending payment of encashment of Earned Leave and Half Pay Leave for BSNL VRS Retirees October 19, 2020The 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, 2020Immediate 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, 2020Payment 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, 2019Leave 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, 2019Leave 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, 2017Clarification 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, 2017Cabinet 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, 20157th 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, 2015IBA 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, 2015Encashment 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, 2015One 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, 2014Railway 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, 2013Timely 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 ...
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