Cash Handling and Treasury Allowance

The Cash Handling and Treasury Allowance is a flat monthly payment for staff who handle cash, by the amount handled; the 7th CPC merged two allowances into it.

Updated 18 July 2026 · Reviewed by Salary-Calculator.in

The Cash Handling and Treasury Allowance is a flat monthly allowance paid to a central government employee who is formally entrusted with handling the office’s cash, as a cashier or treasury clerk. It compensates for the responsibility and the personal liability of holding and disbursing government money, and it is set by the average amount of cash handled each month rather than by the employee’s pay level. Under the 7th Central Pay Commission, notified through Department of Expenditure Resolution No. 11-1/2016-IC dated 6 July 2017, it is a single allowance formed by merging the earlier Cash Handling Allowance and the Treasury Allowance.

The allowance recognises a specific burden. A cashier holds and pays out the office’s money, is personally answerable for any shortage in the chest, and carries the security risk that goes with cash on hand. That responsibility is the same whatever the cashier’s pay level, which is why the allowance is a flat amount keyed to the volume of cash rather than a percentage of pay. It is a responsibility allowance, not a location or a duty-hours allowance.

This article sets out what the allowance compensates, the two allowances it merged and the 7th CPC’s decision to retain rather than abolish them, the rates by the amount of cash handled, who is eligible, how the spread of electronic payments narrowed its scope, the dearness-allowance escalator, and the tax position. The rates below are the base figures in the 2017 decision alongside the current figures, which stand 25 per cent higher because dearness allowance has crossed 50 per cent.

What the allowance compensates

Handling cash is a job with a sharp edge to it. The cashier holds the office’s money, pays it out against bills and claims, and balances the chest at the end of the day, and any shortfall is the cashier’s own liability to make good. On top of that sits the security risk of keeping cash on the premises and moving it. None of this is captured by the ordinary pay of the level, which is set for the grade, not for the specific charge of the cash.

The Cash Handling and Treasury Allowance is the payment for taking on that charge. It is small in rupee terms, because it is a recognition of responsibility rather than a second salary, but it marks out the employee who carries the cash from the colleagues who do not. It belongs with the responsibility allowances rather than the hardship or location allowances, because it answers what the employee is entrusted with, not where they are posted or how their hours fall.

The two allowances it merged, and the decision to retain them

Before the 7th Central Pay Commission there were two closely related allowances in this space. The Cash Handling Allowance was paid to cashiers handling cash disbursement, and the Treasury Allowance was paid for treasury work, both directed at essentially the same responsibility of holding and accounting for government money. Two schemes covered one idea, each with its own rules and rates.

The 7th Central Pay Commission reviewed both and, noting the spread of electronic payments and the shrinking role of physical cash, recommended that they be abolished. That recommendation was not accepted as it stood. On review, the Government decided to retain the payment, because a cashier still holds real responsibility and liability whatever the payment method, and it merged the two overlapping allowances into a single Cash Handling and Treasury Allowance with one rate structure. The outcome is a common feature of the 7th CPC allowance exercise: the Commission proposed a clean sweep of small allowances, and the Government kept a good number of them, often in a consolidated form, where the underlying responsibility had not gone away.

The rate by the amount of cash handled

The allowance has two slabs, and the slab turns on the average monthly cash handled, not on the cashier’s grade:

Average monthly cash handled	Base rate (Rs. per month)	Current rate (Rs. per month)
Up to Rs. 5 lakh	700	875
Over Rs. 5 lakh	1,000	1,250

A cashier who handles up to Rs. 5 lakh of cash in an average month draws the lower slab, and one who handles more draws the higher slab. The measure is the volume of cash passing through the cashier’s hands, which is a fair proxy for the scale of the responsibility and the risk. Because the rate is a flat amount and not a percentage of pay, two cashiers handling the same volume draw the same allowance even if they sit at different pay levels, and the same cashier’s allowance does not rise with an annual increment, only with the dearness-allowance escalator described below or a move into the higher cash slab.

Who is eligible

The allowance is not for everyone who occasionally touches money. It is drawn by the Group C staff who are formally designated to handle cash, the cashier or treasury clerk actually entrusted with holding and disbursing the office’s funds and answerable for the chest. The designation and the responsibility are the qualification.

Because the allowance follows the charge, an employee draws it while they hold the cashier’s charge and stops when the charge is handed over to another. It is tied to the function, not to the post in the abstract, so a transfer of the cash charge moves the allowance with it. This keeps the allowance matched to the person who actually carries the liability at any given time.

How electronic payments narrowed the scope

The context that nearly ended this allowance is worth stating plainly, because it explains both the Commission’s abolition recommendation and the shrinking role of the cashier. Government payments have moved decisively away from cash. Salaries, pensions and scheme benefits are now paid directly into bank accounts, and the Public Financial Management System routes a large share of government disbursements electronically rather than through an office cashier counting out notes. The old picture of a queue at the cash counter on pay day has largely gone.

That shift is why the 7th Central Pay Commission questioned whether a cash-handling allowance still had a rationale, and it is why the volume of cash a modern cashier handles, and therefore the slab they fall in, is generally lower than it once was. The allowance was retained because some cash handling remains, in petty payments, in imprest and contingency spending, and in offices and situations where electronic payment is not practical, but its scope is narrower than in the cash economy it was designed for.

The dearness-allowance escalator

As a fixed-rupee allowance under the 7th Central Pay Commission, the Cash Handling and Treasury Allowance rises by 25 per cent each time dearness allowance rises by 50 per cent, the mechanism that keeps rupee-denominated allowances from falling behind prices. Dearness allowance reached 50 per cent with effect from 1 January 2024, which triggered the first such rise, so the two slabs moved from the base Rs. 700 and Rs. 1,000 to Rs. 875 and Rs. 1,250.

The next 25 per cent step-up does not arrive until dearness allowance reaches 100 per cent, because the escalator moves in whole 50-point blocks. This is the same rule that governs the other small fixed allowances, and it is the only automatic way the amount changes, since the allowance does not track basic pay.

Not a pay-linked or an overtime allowance

Two distinctions keep the allowance in its place. It is not a percentage of pay, so it does not rise with the cashier’s basic pay or with an increment the way a percentage allowance does; it changes only with the cash slab and the dearness-allowance escalator. And it is not an overtime allowance : it pays for the responsibility of the cash charge, not for hours worked beyond the normal day. A cashier who stays late to balance the chest is not paid this allowance for the extra time; the allowance is the flat monthly recognition of holding the charge at all.

It is likewise separate from the dress allowance and the duty-pattern allowances such as the split duty allowance : each of those answers a different feature of the job, and a cashier who qualifies for more than one draws each on its own terms, because they compensate different things.

Tax treatment

The Cash Handling and Treasury Allowance is part of salary income and is taxable in the ordinary way. There is no specific exemption for it: the Section 10(14) exemptions under Rule 2BB of the Income-tax Rules are for defined categories of allowance, chiefly the field, travel and area allowances, and a cash-handling responsibility allowance does not fall within them. It is therefore taxable under both the old and the new tax regimes, and the default new regime under Section 115BAC in any case withdraws the great majority of the Section 10(14) exemptions.

Given the small monthly figure, the rupee effect of the tax is minor, but the allowance is counted in gross salary for the year. For how the allowances feed into the salary computation, see income tax for central government employees and old versus new tax regime .

The 8th CPC outlook

The 7th Central Pay Commission recommended abolishing the two cash allowances, the Government retained them in a merged form, and the 25 per cent escalator has lifted the rates once since, from 1 January 2024. Whether the 8th Central Pay Commission keeps the allowance, revises the slabs, or finally removes it as cash handling continues to shrink is not known, and no figure for the allowance after the 8th CPC can be stated as fact until that commission reports and its recommendations are accepted. Until then the position is Rs. 875 a month for cash up to Rs. 5 lakh and Rs. 1,250 for cash above it, for a formally designated cashier.

Frequently Asked Questions (FAQs)

What is the Cash Handling and Treasury Allowance?

It is a flat monthly allowance paid to a central government employee who is formally entrusted with handling the office’s cash, as a cashier or treasury clerk. It compensates for the responsibility and the personal liability that go with holding and disbursing government money. Under the 7th Central Pay Commission it is a single allowance formed by merging the earlier Cash Handling Allowance and Treasury Allowance, at rates set by the average amount of cash handled each month.

How much is the Cash Handling and Treasury Allowance?

It has two slabs by the average monthly cash handled. Where the average cash handled is up to Rs. 5 lakh a month, the base rate is Rs. 700 a month; where it is over Rs. 5 lakh, the base rate is Rs. 1,000. Because dearness allowance has crossed 50 per cent, these are enhanced by 25 per cent since 1 January 2024, to Rs. 875 and Rs. 1,250 respectively. The amount does not depend on the employee’s pay level.

Who is eligible for the Cash Handling and Treasury Allowance?

It is drawn by Group C staff who are formally designated to handle cash, that is the cashier or treasury clerk actually entrusted with holding and disbursing the office’s money, not every employee who occasionally touches cash. The designation and the responsibility are the qualification, so an employee draws it while they hold the cashier’s charge and stops when the charge is handed over.

Why were the Cash Handling Allowance and the Treasury Allowance merged?

The 7th Central Pay Commission reviewed the two allowances and, noting the spread of electronic payments, initially recommended that they be abolished. On review, the Government decided to retain the payment rather than remove it, because cashiers still hold real responsibility and liability, and it merged the two overlapping allowances into a single Cash Handling and Treasury Allowance with a common rate structure, rather than keep two separate schemes for closely related work.

Has the allowance risen with dearness allowance?

Yes. As a fixed-rupee allowance under the 7th Central Pay Commission, it rises by 25 per cent each time dearness allowance rises by 50 per cent. Dearness allowance reached 50 per cent on 1 January 2024, so the two slabs rose from Rs. 700 and Rs. 1,000 to Rs. 875 and Rs. 1,250. The next 25 per cent step-up does not come until dearness allowance reaches 100 per cent.

Does the allowance depend on my pay level?

No. Unlike a percentage-of-pay allowance, the Cash Handling and Treasury Allowance is a flat rupee amount set only by the average monthly cash handled, not by the pay level of the cashier. A cashier at a lower level and one at a higher level who handle the same volume of cash draw the same amount, because the allowance answers the responsibility of the cash, not the seniority of the person.

Is the Cash Handling and Treasury Allowance taxable?

Yes, it is taxable as part of salary; there is no specific exemption for it. The Section 10(14) exemptions under Rule 2BB do not cover a cash-handling responsibility allowance, so it is taxable under both the old and the new tax regimes. Given the small monthly figure the tax effect is modest, but it is counted in gross salary for the year.

External references

References

Report of the Seventh Central Pay Commission, November 2015, Chapter 8 (Allowances): review of the Cash Handling Allowance and the Treasury Allowance, with the recommendation to abolish them in view of the spread of electronic payments.
Ministry of Finance, Department of Expenditure, Resolution No. 11-1/2016-IC dated 6 July 2017: Government decision on the 7th CPC allowances, effective 1 July 2017, retaining the two allowances by merging them into the Cash Handling and Treasury Allowance at slab rates by the average monthly cash handled.
Department of Expenditure Office Memorandum on the Cash Handling and Treasury Allowance (the merged allowance, the two cash-handled slabs, and the eligibility of designated cashiers).
Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1/2024-E.II(B): dearness allowance revised to 50 per cent with effect from 1 January 2024, triggering the 25 per cent rise in the fixed-rupee allowances.
Income-tax Act 1961, Section 10(14) read with Rule 2BB of the Income-tax Rules, and Section 115BAC (the new tax regime), on the taxability of allowances outside the notified exemptions.