Cash Handling and Treasury Allowance

The Cash Handling and Treasury Allowance is a flat monthly allowance of Rs. 700 or Rs. 1,000, paid to the one official in an office who is appointed to do its cash work. The rate turns on the average monthly cash disbursed in physical form: Rs. 700 a month up to Rs. 5 lakh, Rs. 1,000 a month above it. Both figures are fixed by Department of Personnel and Training Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019, with effect from 1 July 2017.

The allowance is not a payment for grade or for hours. It compensates the personal liability of holding and disbursing government money, which is why it is a flat amount keyed to the volume of cash rather than a percentage of pay, and why it is tied to a named individual by a sanction issued in their own name. A cashier at Level 4 and one at Level 7 who disburse the same physical cash draw the same Rs. 700 or Rs. 1,000.

It exists at all because a recommendation to abolish it was reversed. The 7th Central Pay Commission listed the Cash Handling Allowance at item 23 and the Treasury Allowance at item 189 of the allowances it proposed to abolish, holding that both had lost relevance with technological advance and banking. The Committee on Allowances, reporting on 27 April 2017, found that cash transactions could not be eliminated at once and recommended merging the two into one allowance with two slabs, benefiting about 14,000 employees at an additional annual cost of Rs. 14.27 crore. The Cabinet accepted that on 28 June 2017 and it was notified through Department of Expenditure Resolution No. 11-1/2016-IC dated 6 July 2017.

What follows sets out the two rates and how the slab is certified, what counts as cash handled and what is excluded from the reckoning, which grades may be appointed cashier, the six conditions and three bars in the governing Office Memorandum, the security deposit under Rule 306 of the General Financial Rules, 2017, the position on the dearness-allowance escalator, the effect on pension and the tax treatment.

Rates and the two slabs

The allowance has exactly two rates, and the higher one is Rs. 1,000 a month. Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 sets them out in a two-row table against the amount of average monthly cash handled:

The order is effective from 1 July 2017, the common effective date for the 7th Central Pay Commission allowance decisions, and it has not been amended since. Annualised, the allowance is worth Rs. 8,400 or Rs. 12,000 a year.

The slab is not self-declared. Condition (ii) of paragraph 2 requires the ministry or the head of department concerned to certify the amount of cash disbursed on the basis of the previous financial year’s average, and to sanction the rate appropriate to that quantum. The certificate is the operative document: a cashier does not move to the higher slab because the office’s payments grew during the year, but because the following year’s certificate says the previous year’s average crossed Rs. 5 lakh a month.

What counts as cash handled

Only physical cash counts, and that single exclusion decides the slab in most offices. Condition (i) of paragraph 2 of Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 states that the amount of allowance will depend on the average amount of monthly cash disbursed, excluding payment by cheques, drafts, ECS, online payments and other modes where cash handling in physical form is not involved.

Condition (ii) then prescribes the arithmetic. The average is arrived at from the cash book: take the total amount shown as disbursed, and reduce it by the items disbursed as cheques, R.T.Rs, drafts, ECS and online payments. What survives that subtraction is the figure that decides whether the cashier draws Rs. 700 or Rs. 1,000.

This is why the allowance has quietly compressed toward its lower slab. Salaries, pensions and scheme benefits reach bank accounts directly, and the Public Financial Management System routes a large share of government disbursement electronically. An office may push several crore rupees through its cash book in a year and still fall in the Rs. 700 slab, because almost none of it was counted out in notes. The residue is petty payments, imprest and contingency spending, and payments in places and situations where electronic transfer is not practical.

The same test runs through the General Financial Rules. Rule 306(2) of the General Financial Rules, 2017 fixes the amount of security to be taken from a government servant on the basis of actual cash handled, and states that this shall not include account payee cheques and drafts. The security and the allowance are therefore measured against the same thing: real currency in the cashier’s custody.

Who may be appointed cashier

The allowance reaches four categories of official, and the ceiling is Level 7 of the pay matrix. Paragraph 2 of Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 leaves the power to grant the allowance delegated to the ministries and heads of departments, who at their discretion may appoint a Junior Secretariat Assistant, a Senior Secretariat Assistant, an Assistant Section Officer, or an official holding a substantive post up to Level 7 of the pay matrix, to perform the duties of cashier.

Two points follow from that wording, and both are missed often. The reach is not confined to Group C, because the Assistant Section Officer is a Group B post at Level 7. And the qualification is the appointment, not the grade: an official within those categories who has not been appointed to do the cash work draws nothing, because condition (vii) requires the sanction in each case to be issued in the name of the person appointed to do the cash work and for whom the allowance is sanctioned.

Because the sanction names a person, the allowance moves when the cash charge moves. It runs while that official holds the charge and stops when a fresh sanction issues in someone else’s name.

The three bars: direct recruits, viable cadres and the SSA cum Cashier

Three categories of official do the cash work and draw nothing for it. Condition (viii) of paragraph 2 of the 18 January 2019 Office Memorandum states that where a cashier is appointed on direct recruitment or promotion to such a post under the recruitment rules, no Cash Handling and Treasury Allowance is admissible. The logic is that the post itself is a cashier’s post, so the cash work is the job rather than an addition to it.

The same condition carries a second bar keyed to cadre strength. Where a department or organisation has enough cashiers in various grades to constitute a viable cadre, the post of cashier carries no allowance at all. This is the provision that keeps the Ministry of Railways outside the scheme: the Committee on Allowances recorded on 27 April 2017 that except for the Ministry of Railways there is no separate cadre of cashiers in the central government.

Condition (ix) adds the third. The allowance is not admissible to a Senior Secretariat Assistant cum Cashier, because cash handling is part and parcel of the duties of that post. The distinction across all three is the same one: the allowance pays for cash work taken on over and above the duties of the post, and not for cash work that is the post.

Security under the General Financial Rules, and when payment starts

The allowance does not begin on the appointment order alone. Condition (iv) of paragraph 2 of Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 requires every official appointed to work as cashier, unless exempted by the competent authority, to furnish security under the provisions of Rule 306(1) to Rule 306(4) in Chapter 12 of the General Financial Rules, 2017. Condition (v) then fixes the start date at the date of issue of the appointment order or the date of furnishing security, whichever is later.

Rule 306(1) of the General Financial Rules, 2017 requires every government servant who actually handles cash or stores to furnish security in the amount and form the Central Government or an Administrator prescribes, and to execute a security bond setting out the conditions on which the Government holds the security and may refund or appropriate it. Rule 306(2) fixes the amount on actual cash handled, excluding account payee cheques and drafts. Rule 306(3) prescribes a Fidelity Bond in Form GFR 17 and a security bond executed in Form GFR 14, and requires the government servant to pay the premium that keeps the bond alive and to produce the receipt; an official who fails to produce it shall not be allowed to perform the duties of the post. Rule 306(4) requires an official officiating against another cash handling post to furnish the full security prescribed for that post, with a power in the ministry, the Administrator or the Comptroller and Auditor General to exempt a short-term officiating arrangement where there is no risk, the officiating government servant is permanent, and the arrangement does not exceed four months.

Two further rules bound the arrangement. Rule 307 lists the cases where no security is needed at all, including custody of stores the competent authority does not consider considerable, ordinary office furniture and stationery, librarians and library staff, and drivers of government vehicles. Rule 308 requires a security deposit to be retained for at least six months after the government servant vacates the post, while the security bond itself is retained permanently or until there is certainly no further need for it.

One official per office, and the leave-vacancy position

Only one official in an office draws the allowance, whatever the volume of cash or the number of people who touch it. Condition (vi) of paragraph 2 of the 18 January 2019 Office Memorandum states that not more than one official should be allowed the Cash Handling and Treasury Allowance in an office or department. The Department of Posts applied that condition on 17 October 2019 to a query asking whether all treasurers in a large office draw it, and answered that they do not.

A leave vacancy does not create a second entitlement either. The Department of Posts clarification dated 30 September 2021, issued on union letter No. 11/Treasury Allow/2020 dated 12 August 2021, states that the allowance is to be granted to the appointed cashier only, and is therefore not granted in the leave vacancy of the incumbent. An official who takes over the chest while the cashier is on earned leave carries the liability without the payment, unless a fresh appointment order and a sanction in their own name issue.

Newly created offices and relaxation of the conditions

A new office may sanction the allowance on an estimate. Paragraph 3 of Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 permits ministries and heads of departments, in the case of a newly created office where it is not possible to observe all the conditions, to grant the allowance to cashiers during the first year of existence on the basis of the estimated average monthly cash disbursements. Every other condition in paragraph 2 continues to apply, so the security bond, the single-official cap and the sanction in the individual’s name are not relaxed with it.

Any other relaxation is out of the hands of the sanctioning ministry. Paragraph 4 of the same order requires the prior concurrence of the Department of Personnel and Training for any relaxation of the terms and conditions. Paragraph 6 records that in so far as persons serving in the Indian Audit and Accounts Department are concerned, the orders were issued after consultation with the Comptroller and Auditor General of India.

The two allowances it replaced

Before 1 July 2017 there were two allowances and seven slabs between them, and both are gone. The Cash Handling Allowance was granted to cashiers in the ministries and departments on five slabs of average monthly cash handled, and the Treasury Allowance to Treasurers and Assistant Treasurers in the Department of Posts working in head post offices and large sub offices, on two:

The merged structure is not a multiplication of those figures. The top pre-revised Cash Handling Allowance slab of Rs. 900 became Rs. 1,000 and the lowest slab of Rs. 230 became Rs. 700, so the flattening from seven slabs to two moved the small cashier up sharply and the largest one very little. The Committee on Allowances recorded its reasoning in one line: as these allowances are partially indexed to dearness allowance, the rates may be increased as proposed.

The Assisting Cashier Allowance, at item 11 of the same list, was not reversed. It was abolished outright on the same reasoning of technological advance and banking, so the staff who assist the cashier retain no payment while the cashier retains one.

Why abolition was recommended, and why it was reversed

The 7th Central Pay Commission gave a single reason for abolishing both allowances, and it was about payment technology rather than about the work. Discussing them at paragraphs 8.10.9, 8.10.57 and 8.10.80 of its report of November 2015, the Commission held that with technological advances and the growing emphasis on banking these allowances had lost their relevance, and recommended that ministries and departments work out plans to first minimise and then eliminate all cash transactions.

The Committee on Allowances took the opposite view on the facts. Its report of 27 April 2017 recorded that while efforts to eliminate cash transactions are being made and need to be expedited, all cash transactions cannot be eliminated immediately; that except for the Ministry of Railways there is no separate cadre of cashiers; and that the number of employees volunteering to take on the assignment has been going down on account of cash handling risk. On functional grounds the Committee held that the allowances have to be retained at this stage, and because the rates of both were linked to the quantum of cash handled, it recommended merging them into one allowance with two slabs.

The Committee also wrote the abolition back in as a future step. Its recommendation closes by noting that since the Government has initiated many steps towards digitisation and has been promoting cashless transactions, the Government may consider abolishing this allowance at a later stage when significant success is achieved in phasing out cash transactions. The Cabinet accepted the retention on 28 June 2017. The Cash Handling and Treasury Allowance is one of twelve allowances the Committee reversed or modified, alongside the breakdown, coal pilot, cycle, funeral, launch campaign, space technology, operation theatre, overtime, ration money and risk allowances, and the abolished allowances article maps that exercise in full.

Whether the rate rises with dearness allowance

The Cash Handling and Treasury Allowance has not been enhanced since 1 July 2017, and the rates payable today are Rs. 700 and Rs. 1,000. Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 carries no escalation clause: it fixes two figures and nine conditions, and none of the conditions provides for the amount to move with prices.

The 25% step-up that most fixed allowances carry is attached allowance by allowance, not granted across the board. Paragraph 8.10.66 of the 7th Central Pay Commission report attaches it to the risk and hardship matrix in one sentence, “The rates will increase further by 25 percent each time DA rises by 50 percent”, and separate orders attach it to the children education allowance and the hostel subsidy, to the tough location family including the bad climate allowance and the tribal area allowance, and to the conveyance and daily allowance rates. Dearness allowance reached 50% of basic pay with effect from 1 January 2024 by Department of Expenditure Office Memorandum No. 1/1/2024-E-II(B) dated 12 March 2024, and the allowances carrying the clause moved on that date. The Cash Handling and Treasury Allowance was not among them.

There is a real tension in the record, and it is worth stating rather than smoothing over. The Committee on Allowances described both parent allowances as partially indexed to dearness allowance, which is the 7th Central Pay Commission’s own name for the family that carries the escalator. But the Committee used that description to justify the one-time increase to Rs. 700 and Rs. 1,000 rather than to attach a standing clause, the implementing order of 18 January 2019 contains no such clause, and the departmental clarifications of 17 October 2019 and 30 September 2021 continue to work from Rs. 700. A sanction issued today is issued at Rs. 700 or Rs. 1,000, and any figure above those requires an amending order that has not been made.

How it compares with the neighbouring allowances

The Cash Handling and Treasury Allowance answers what an official is entrusted with, which is a different question from where they are posted or how long they work. The four payments below are the ones most often confused with it:

A cashier who also qualifies under another head draws each on its own terms, because they compensate different things. What a cashier cannot do is draw the allowance twice, or draw it for staying late to balance the chest: the payment is the flat monthly recognition of holding the charge, and overtime allowance was withdrawn for most civilian categories in the same 7th Central Pay Commission exercise.

Effect on pension, gratuity and the NPS contribution

The allowance adds nothing to retirement benefits, and it stops on the day the cash charge is handed over. Pension under the CCS (Pension) Rules, 2021 is computed on emoluments, which means basic pay in the pay matrix and not the allowances drawn alongside it. Retirement gratuity is computed on basic pay plus dearness allowance. The National Pension System contribution of 10% by the employee and 14% by the Government is likewise on basic pay plus dearness allowance.

The Cash Handling and Treasury Allowance is outside all three definitions. A cashier who draws Rs. 1,000 a month for fifteen years takes Rs. 1,80,000 across that period and carries none of it into the pension, the commutation value or the family pension. The value of the career at retirement comes from the level and the stage in the pay matrix, which is the general position for every fixed-rupee allowance on this side of the pay structure.

Tax treatment

The Cash Handling and Treasury Allowance is taxable in full, under the old regime and the default new regime alike. It is salary, and no provision exempts it. For the tax year 2026-27 the prescribed-allowance exemptions sit in the Table in Schedule III to the Income-tax Act, 2025, read with the Income-tax Rules, 2026 notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026, and no entry in that scheme names a cash handling, treasury or responsibility allowance. Rule 2BB of the repealed Income-tax Rules, 1962 did not name one either, so the position did not change when the statute did on 1 April 2026.

The rupee effect is small and often nil. At Rs. 700 a month the allowance adds Rs. 8,400 to gross salary for the year and at Rs. 1,000 it adds Rs. 12,000. Under Section 202 of the Income-tax Act, 2025 the standard deduction is Rs. 75,000 and the Section 87A rebate makes a total income up to Rs. 12 lakh tax-free, which covers a cashier at Level 4 or Level 5 comfortably. The allowance is still shown in gross salary and reflected in Form 16, and it is counted for TDS on salary by the drawing and disbursing officer whether or not any tax finally falls due.

Bearing on the 8th Central Pay Commission

No rate for this allowance after the 8th Central Pay Commission can be stated as fact, because the Commission has not reported. It was constituted by Department of Expenditure Resolution F. No. 01-01/2025-E.III(A) dated 3 November 2025, with 18 months to report, a window that expires on 3 May 2027. Until it reports and its recommendations are accepted, the operative figures remain the Rs. 700 and Rs. 1,000 set on 18 January 2019.

The direction of travel is on the record, though, and it points one way. The 7th Central Pay Commission recommended abolition outright. The Committee on Allowances reversed that on the functional ground that cash had not yet gone, while writing into its own recommendation that the Government may consider abolishing the allowance at a later stage when significant success is achieved in phasing out cash transactions. Nine years of digital disbursement have passed since that sentence was written, and the exclusion of cheque, draft, ECS and online payments from the reckoning means the measured base of the allowance shrinks every year even where the allowance survives. The 8th Central Pay Commission inherits an allowance already argued down to two slabs and about 14,000 employees.

Related Articles

• Allowances for central government employees
• Abolished allowances under the 7th CPC
• Assisting Cashier Allowance
• Extra Work Allowance
• General Financial Rules, 2017
• Public Financial Management System
• Overtime allowance
• Night duty allowance
• Split duty allowance
• Honorarium
• Dress allowance
• Dearness allowance
• Children education allowance
• Bad climate allowance
• Tribal area allowance
• Risk and hardship allowance
• House rent allowance
• Transport allowance
• Assistant Section Officer salary
• MTS salary
• Earned leave
• Pay matrix
• Basic pay
• Salary by pay level
• Take-home salary for central government employees
• CCS (Pension) Rules, 2021
• Gratuity for central government employees
• Commutation of pension
• Family pension
• National Pension System
• Income tax for government employees
• Income-tax Act, 2025
• Section 202 of the Income-tax Act 2025
• Standard deduction
• Section 87A rebate
• TDS on salary
• Form 16
• Old versus new tax regime
• Department of Expenditure
• Department of Personnel and Training
• 7th Central Pay Commission
• 8th Central Pay Commission
• Central government employees in India
• 7th CPC salary calculator

External references

• Department of Personnel and Training
• DoPT circulars, Establishment (Pay) division
• Committee on Allowances report, 27 April 2017, Department of Expenditure
• General Financial Rules, 2017, Department of Expenditure
• Department of Expenditure, Ministry of Finance
• Public Financial Management System
• Income Tax Department

References

1. Department of Personnel and Training, Office Memorandum F. No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019: Cash Handling and Treasury Allowance, rates of Rs. 700 and Rs. 1,000, paragraph 2 conditions (i) to (ix), paragraph 3 on newly created offices, paragraph 4 on relaxation, and paragraph 5 making the orders effective from 1 July 2017.
2. Report of the Seventh Central Pay Commission, November 2015, paragraphs 8.10.9, 8.10.57 and 8.10.80: Cash Handling Allowance at item 23 and Treasury Allowance at item 189, recommended for abolition on the ground that they had lost relevance with technological advances and the growing emphasis on banking.
3. Report of the Committee on Allowances, 27 April 2017, paragraph 3.6.2: merger of the Cash Handling Allowance and the Treasury Allowance into a single allowance with two slabs of Rs. 700 and Rs. 1,000, benefiting about 14,000 employees at an additional annual cost of Rs. 14.27 crore.
4. Ministry of Finance, Department of Expenditure, Resolution No. 11-1/2016-IC dated 6 July 2017: Government decision on the 7th Central Pay Commission recommendations on allowances, effective 1 July 2017.
5. General Financial Rules, 2017, Chapter 12, Rule 306(1) to Rule 306(4) (security from government servants handling cash, Form GFR 17 Fidelity Bond and Form GFR 14 security bond), Rule 307 (exemptions) and Rule 308 (retention of security).
6. Ministry of Communications, Department of Posts, clarification dated 17 October 2019 on File No. 06-4/2018-PAP: one official per office, and the annual review of the slab.
7. Ministry of Communications, Department of Posts, clarification dated 30 September 2021 on union letter No. 11/Treasury Allow/2020 dated 12 August 2021: the allowance is granted to the appointed cashier only and is not granted in the leave vacancy of the incumbent.
8. Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1/2024-E-II(B) dated 12 March 2024: dearness allowance raised to 50% of basic pay with effect from 1 January 2024.
9. Income-tax Act, 2025 (Act No. 30 of 2025), Section 19(1), Section 202 and Schedule III; Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026 notifying the Income-tax Rules, 2026 with effect from 1 April 2026.