EARNED LEAVE (EL) ENCASHMENT RULES
(300 Days Limit, Calculation & Tax)
(Don’t let your leaves lapse. Turn them into cash.)
⚡ Quick Answer: How much cash can you get?
Leave Encashment allows you to receive cash for unutilized Earned Leave (EL) and Half Pay Leave (HPL) at the time of retirement. The maximum limit is 300 days.
⚠️ Tax Rule: For Central/State Govt employees, encashment at retirement is 100% Tax-Free. (Note: Encashment during service/LTC is fully taxable).
📢 Share this Guide:
Your accumulated leave is essentially money in the bank. Under CCS (Leave) Rules, you can encash up to 300 days of leave when you retire. But what if you don’t have 300 days of EL? Can you use Half Pay Leave (HPL)?
1. The Calculation Formula (Basic + DA)
The government pays you the full salary for the accumulated days. Note: House Rent Allowance (HRA) is NOT included in this calculation.
🧮 Retirement Formula:
Cash Equivalent = [(Basic Pay + DA) / 30] × Number of Days (Max 300)
2. The “Shortfall” Rule (Using HPL)
If your Earned Leave (EL) is less than 300 days, you can use your Half Pay Leave (HPL) to fill the gap up to the 300-day limit.
Scenario: Shortfall Calculation
- Available EL: 250 Days
- Available HPL: 100 Days
- Calculation Step 1: Full encashment of 250 EL days.
- Calculation Step 2: You can use 50 HPL days to reach the 300 limit.
- Note: HPL days are paid at “Half Leave Salary” rate (effectively half the amount per day).
3. Encashment on LTC (During Service)
You don’t have to wait for retirement. You can encash leaves while taking LTC (Leave Travel Concession).
| Condition | Rule Detail |
|---|---|
| Limit Per Spell | Max 10 Days of EL at one time. |
| Career Limit | Max 60 Days in entire service. |
| Impact on 300 Days | These days are NOT deducted from the 300-day retirement limit. |
❓ Encashment Common Questions
Is leave encashment taxable?
For Central/State Government employees, encashment received at retirement is fully exempt from tax. However, encashment taken during service (e.g., with LTC) is fully taxable.
What happens if I resign?
In case of resignation, leave encashment is restricted to a maximum of 150 days (half of the retirement limit).