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Tax Benefits Under editorial review

Leave Encashment for Central Government Employees

Short answer

Central Government employees can convert unused earned leave into cash: up to 10 days along with LTC, and at retirement up to the retirement limit. Government employees are fully exempt from tax on leave encashment at retirement.

Last checked · 2 key figures from the fact register

Key facts

Key facts on this page with their source and the date each was checked
FactValueSourceDate checked
Leave encashment exemption (non-government)₹25 lakh lifetime limit; government employees fully exempt Reported by reputable sourcesGConnect: increased limit of tax exemption on leave encashment (opens in a new tab)
Leave encashment with LTCUp to 10 days of earned leave Reported by reputable sourcesDoPT LTC FAQ (confirm the 10-day limit in the FAQ) (opens in a new tab)

What it is

Leave Encashment lets you receive pay for earned leave you did not take.

Who gets it

Central Government employees with an earned-leave balance, and retirees.

How much

Up to 10 days along with LTC, and the retirement limit at superannuation. Government employees are fully exempt from tax on leave encashment at retirement.

This page is under editorial review. Some figures have not yet been confirmed against official sources. Check the official source before you act.

Eligibility

  • Earned leave balance is available
  • Encashment of up to 10 days is requested together with LTC

Value

Cash value equals (Basic Pay + DA) ÷ 30 × days encashed.

How to claim

  1. Include leave encashment in your LTC application.
  2. Submit the sanction order.
  3. The amount is paid with the LTC settlement.

Documents checklist

  • Leave account
  • LTC sanction

Deadlines

Along with the LTC claim.

Common mistakes

  • Forgetting to request it with LTC
  • Encashing more days than allowed

FAQ

Is it taxable?

Encashment at retirement is fully exempt for government employees. For non-government employees there is a lifetime limit of ₹25 lakh. During service it is generally taxable.

Official sources

Written by the PerkNavigate editorial team from the sources above; not yet checked against official sources. See how we verify perks. Information only; not financial, tax or legal advice (disclaimer). Found an error? Tell us.

Sources and status

Each figure on this page comes from the fact register. What the badges mean.

Pay levels and roles

Salary scenarios for the 8th Pay Commission, by level and by role. Every figure is a scenario, not an official number.

By pay level

By role

The full 7th CPC pay matrix

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