Leave encashment

Leave encashment, formally the cash equivalent of leave salary, is the lump sum a central government employee is paid for leave standing unused in the leave account when service ends, granted under Rule 39 of the CCS (Leave) Rules, 1972. On superannuation the authority competent to grant leave issues the order suo motu, without any application, for earned leave and half pay leave together up to a maximum of 300 days, computed on the pay admissible on the date of retirement plus the dearness allowance admissible on that date. It does not reduce the pension or the retirement gratuity, and for a government employee the entire amount is deductible from income under serial number 13 of the Table in Section 19(1) of the Income-tax Act, 2025.

The sum is large because earned leave accrues faster than most employees spend it and the encashment is priced at the pay reached at the end of a career. An employee retiring on a basic pay of Rs. 1,00,000 a month with the full 300 days at credit receives Rs. 16,00,000 at the dearness allowance rate of 60%, paid once and untaxed. Rule 39 is not one rule but a family of them: Rule 38-A covers encashment while in service, Rule 39-A death, Rule 39-B invalidation, Rule 39-C the order of payees, and Rule 39-D absorption in a public sector undertaking, each with its own ceiling and its own base.

This article sets out what leave is encashable and how it accrues, the exact formula and the 300-day cap, the pay that counts, the encashment allowed with Leave Travel Concession, the entitlement on every mode of exit including resignation, termination, invalidation, absorption and death, the power to withhold the money where proceedings are pending, the treatment on re-employment, and the income-tax position under the Income-tax Act, 2025. The leave encashment calculator works the figure out for a given pay and leave balance.

What is encashable: earned leave and half pay leave

Only two kinds of leave are encashable, and they enter the calculation on different terms. Earned leave is credited in advance in two instalments of 15 days each, on the first day of January and of July, under Rule 26(1)(a)(i), so 30 days a year. Unused earned leave is carried forward under Rule 26(1)(b), subject to the accumulation ceiling of 300 days. A proviso to that clause handles the crowded end of the account: where the balance on the last day of December or June is 300 days or less but more than 285, the advance credit of 15 days is kept aside rather than credited, adjusted first against the earned leave actually taken in that half-year, and only the residue is credited at the close.

Half pay leave is credited in two instalments of 10 days each on the same two dates, under Rule 29(1) as substituted by DoPT Notification No. 11020/01/2017-Estt(L) dated 11 December 2018, so 20 days a year. It carries no accumulation ceiling of its own. In the year of retirement or resignation the credit is proportionate, at 5/3 days for each completed calendar month up to the date of retirement, under Rule 29(2)(b). A spell of absence or suspension treated as dies non is penalised in the account: Rule 29(2)(d) reduces the next half-yearly credit by one-eighteenth of the dies non period, subject to a maximum of 10 days.

Half pay leave matters for encashment only where earned leave falls short of 300 days at retirement. Because it has no ceiling of its own, an employee who has drawn little sick leave over a career can reach retirement with 400 or more half pay leave days and encash none of them, having already filled the 300 with earned leave. Commuted leave, extraordinary leave and casual leave are not encashable at all: commuted leave is half pay leave already converted and spent, extraordinary leave carries no leave salary under Rule 40(5), and casual leave is a concession rather than a recognised kind of leave and is drawn from no account.

The cash equivalent formula

Rule 39(2)(b) fixes the cash equivalent in two parts. The earned leave component is:

Earned-leave cash = (pay admissible on the date of retirement + dearness allowance admissible on that date) / 30 x days of unutilised earned leave at credit

The half pay leave component runs on the half pay leave salary:

Half-pay-leave cash = (half pay leave salary on the date of retirement + dearness allowance admissible on that date) / 30 x days of half pay leave at credit

Three features of the formula decide most disputes about it. The divisor is a flat 30, written into the rule, so a day of leave is one-thirtieth of a month whatever the calendar month of retirement holds. The half pay leave salary is half the pay under Rule 40(3), and the dearness allowance rides on that halved figure, so the half-pay-leave day-rate is exactly half the earned-leave day-rate rather than something close to it. And the date that fixes the rate is the date of retirement, which Rule 3(1)(e) defines as the afternoon of the last day of the month in which the employee attains the prescribed age, so a dearness allowance revision notified with effect from a date on or before that day feeds the encashment even if the order issues later and the arrears are paid afterwards.

Rule 39(2)(c) closes off the obvious workaround. To make up a shortfall in earned leave, no commutation of half pay leave is permissible: the half pay leave days cannot first be converted to full-pay commuted leave and then encashed at the full rate. They enter at the half rate or not at all.

The 300-day cap

Earned leave and half pay leave together cannot exceed 300 days for encashment on retirement, and the Note to Rule 39(2)(b) states that overall limit expressly. Earned leave is counted first, up to 300 days, and half pay leave fills only whatever balance remains. An employee with 320 days of earned leave encashes 300 and loses the excess 20. An employee with 260 days of earned leave and 80 days of half pay leave encashes 260 earned-leave days and 40 half-pay-leave days to reach 300, and the remaining 40 half-pay-leave days lapse.

The cap counts days, not rupees, which is why it bites hardest on the employee with a large half pay leave balance: those days are worth half as much each and are admitted only in the room earned leave leaves behind. There is no higher cap for any cadre, and no discretion to exceed it.

The ceiling reached 300 days from 240 by DoPT Notification No. 13026/1/99-Estt.(L) dated 18 April 2002, which substituted the figure in Rule 26 and raised the companion threshold in the proviso from 225 days to 285. The same notification raised the resignation ceiling in Rule 39(6)(a)(ii) from 120 days to 150. Leave preparatory to retirement under Rule 38 moved to the same 300-day figure separately, by DoPT Notification No. 13026/1/2002-Estt.(L) dated 15 and 16 January 2004.

Pay that counts and pay that does not

The base is basic pay plus dearness allowance, and nothing else. The CCS (Leave) Rules, 1972 do not define pay; Rule 3(2) imports the meaning from the Fundamental Rules, so pay is the figure drawn in the applicable level of the pay matrix, and the dearness allowance admissible on the date of retirement is added to it before the division by 30. At the current rate of 60% of basic pay, effective from 1 January 2026 under Department of Expenditure Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026, the encashment base is 1.6 times the basic pay.

That inclusion of dearness allowance is the point that distinguishes leave encashment from the pension. Pension calculation under Rule 44 of the CCS (Pension) Rules, 2021 runs on emoluments meaning basic pay alone, without dearness allowance; leave encashment under Rule 39 adds it. Two payments from the same retirement therefore sit on different bases, and a pension figure cannot be used to sanity-check an encashment figure.

House rent allowance is excluded, and Rule 38-A(3) says so expressly for the in-service encashment. So are transport allowance and the other compensatory allowances. Non-practising allowance is the exception that proves the rule: it is reckoned as pay for dearness allowance and for retirement benefits by the order that grants it, so it enters the base for a medical officer, while an allowance that is merely named as pay does not.

Encashment in service with Leave Travel Concession

Rule 38-A(1) permits a serving government servant to encash up to 10 days of earned leave at a time when availing Leave Travel Concession, on two conditions: a balance of at least 30 days of earned leave must remain at credit after both the encashment and the leave being availed, and the total encashed across the entire career must not exceed 60 days. The rule was inserted by DoPT Notification No. 14028/1/2010-Estt.(L) dated 26 August 2011.

The valuation follows Rule 38-A(2) and uses the same shape as the retirement formula, with the pay and dearness allowance admissible on the date of availing the concession rather than at retirement, divided by 30, times the days encashed up to 10. Rule 38-A(3) excludes house rent allowance from it.

Rule 38-A(4) settles the question employees ask most often about it: the earned leave so encashed is not deducted from the quantum that can be encashed under Rules 6, 39, 39-A, 39-B, 39-C and 39-D. An employee who has used the full career allowance of 60 days still retires with up to 300 days encashable. The days are debited from the leave balance itself, which is a real cost, but they are not set against the retirement ceiling.

One condition carries a penalty. Under Rule 38-A(5), a government servant who fails to avail the Leave Travel Concession within the time prescribed under the CCS (LTC) Rules, 1988 must refund the entire amount encashed, together with interest at 2% above the rate the government allows on Provident Fund balances, and the leave debited for the encashment is credited back.

Entitlement by mode of exit

The mode of exit decides both the ceiling and whether half pay leave counts at all, and the differences are wide enough that the general 300-day figure is wrong for several of them.

Voluntary retirement and premature retirement under FR 56(j) fall under Rule 39(5), which grants the cash equivalent of both earned leave and half pay leave up to 300 days on the same terms as sub-rule (2). Resignation is the outlier: Rule 39(6)(a)(ii) allows only earned leave, only to the extent of half the leave at credit, and caps the result at 150 days, with no half pay leave component at all. An employee resigning with 200 days of earned leave encashes 100.

A technical resignation escapes that reduction entirely, because it never reaches Rule 39. Rule 9(2) provides that where a government servant applies for another post under the Government of India outside the parent office or department, the application is forwarded through proper channel, and the applicant is required to resign before taking up the new post, the resignation does not cause the leave at credit to lapse. The balance moves with the employee to the new post instead of being encashed at half value.

Dismissal or removal pays nothing. Rule 9(1) provides that the claim to leave at credit ceases from the date of dismissal or removal, except as Rule 39 provides, and Rule 39 contains no clause for either. Compulsory retirement imposed as a penalty is a retirement rather than a removal, so the encashment survives it. Where a dismissed employee is reinstated on appeal or revision, Rule 9(3) entitles them to count the service before dismissal for leave.

Rule 39-B covers invalidation, where a medical authority declares a government servant completely and permanently incapacitated for further service, and grants earned leave and half pay leave up to 300 days on the sub-rule (2) basis. Rule 39-B(2) carries a restriction easily missed: a government servant not in permanent or quasi-permanent employ receives no cash equivalent for the half pay leave at credit on invalidation, only for the earned leave.

Rule 39-D covers permanent absorption in a corporation or company wholly or substantially owned or controlled by the central or a state government, and grants earned leave only, up to 300 days. The Note added by DoPT Notification No. 13026/3/2011-Estt.(L) dated 28 March 2012 defines permanent absorption for this purpose as an appointment applied for through proper channel followed by resignation from government service to take it up, which is what separates a Rule 39-D absorption from an ordinary resignation under Rule 39(6)(a)(ii).

Death in service and who is paid

Rule 39-A pays the family the cash equivalent of the leave salary the deceased employee would have received had they gone on the earned leave that would have been due and admissible but for the death, on the date immediately following the death, not exceeding leave salary for 300 days. The payment is made without any reduction on account of the pension equivalent of the death-cum-retirement gratuity. The Note to Rule 39-A, from Ministry of Finance Notification No. 16(5)-E.IV(A)/74 dated 11 April 1975, adds dearness allowance on top, as separately ordered.

Rule 39-A names earned leave only. Unlike Rule 39(2), which pays earned leave and half pay leave together, the death provision does not reach the half pay leave balance, which is a real difference in outcome for an employee who dies with a short earned leave account and a long half pay leave one.

Rule 39-A also states its 300 days as including the days for which encashment was allowed along with Leave Travel Concession while in service, which reads against Rule 38-A(4), inserted later in 2011, under which the earned leave encashed with the concession is not deducted from the quantum encashable under Rule 39-A among others. The two provisions are in terms inconsistent, and the DoPT consolidated rules as updated on 24 September 2024 print both without a reconciling note. On the ordinary principle that the later amendment governs, Rule 38-A(4) prevails and the concession days are not set off; an office relying on the parenthesis in Rule 39-A should be asked to reconcile it with Rule 38-A(4) in writing.

Rule 39-C fixes the order of payees, and applies not only to death in service but to death after retirement or after final cessation of duties before the cash equivalent is actually received. Payment goes to the widow, or to the eldest surviving widow where there is more than one, seniority being reckoned by the date of marriage and not by age, or to the husband where the deceased was a female government servant. Failing that it runs to the eldest surviving son or adopted son, then the eldest surviving unmarried daughter, the eldest surviving widowed daughter, the father, the mother, the eldest surviving married daughter, the eldest surviving brother below 18, the eldest surviving unmarried sister, the eldest surviving widowed sister, and finally the eldest child of the eldest predeceased son.

Withholding on suspension or pending proceedings

Rule 39(3) is the one provision that lets the government keep the money. Where a government servant retires on attaining the age of retirement while under suspension, or while disciplinary or criminal proceedings are pending, the authority competent to grant leave may withhold the whole or part of the cash equivalent of earned leave, if in that authority’s view there is a possibility of some money becoming recoverable on the conclusion of the proceedings. The power was inserted by DoPT Notification No. 14028/6/81-Estt.(L) dated 17 October 1983.

The withholding is provisional, not a forfeiture. On the conclusion of the proceedings the retired employee becomes eligible for the amount withheld, after adjustment of government dues. The rule names the cash equivalent of earned leave, and it turns on a possibility of recovery rather than on a finding of guilt, so an order under it is an administrative precaution and is exercised at the point of retirement, before any outcome is known. It sits alongside the parallel power in Rule 8 of the CCS (Pension) Rules, 2021 to withhold or withdraw a pension, and the two are exercised separately: a decision on the pension does not carry the leave encashment with it.

Re-employment and extension of service

Rule 39(6)(a)(iii) governs the re-employed pensioner. On termination of the re-employment, the authority competent to grant leave grants suo motu the cash equivalent of both earned leave and half pay leave at credit on that date, subject to a maximum of 300 days including the period for which encashment was allowed at the time of retirement. An employee who encashed the full 300 days on superannuation therefore encashes nothing at the end of the re-employment, however much leave the re-employed spell earned.

The base is defined separately for this case. Rule 39(6)(b) requires the pay to be the pay fixed in the scale of the post of re-employment before adjustment of pension and the pension equivalent of other retirement benefits, with the dearness allowance appropriate to that pay. This matches Rule 40(7)(c), under which leave salary during re-employment is based on the pay drawn exclusive of the pension and the pension equivalent, so the pensioner is not penalised twice for drawing a pension alongside the re-employed pay.

Rule 39(4) covers an extension of service granted in the interest of public service beyond the date of retirement. During the extension the employee may be granted earned leave earned in the extension plus the earned leave at credit on the date of retirement, up to the Rule 26 ceiling. After the extension expires, the cash equivalent is computed on the sub-rule (2) basis for earned leave and half pay leave at credit on the date of retirement, plus what was earned during the extension, reduced by what was availed in it, and the whole is again capped at 300 days.

Income tax on leave encashment

For a central government employee retiring in the tax year 2026-27, the entire cash equivalent is deductible in computing salary income, with no monetary ceiling. The governing provision is serial number 13 of the Table in Section 19(1) of the Income-tax Act, 2025, which came into force on 1 April 2026 and covers “payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise”, against which column C reads “Entire amount”. The predecessor was Section 10(10AA)(i) of the Income-tax Act, 1961, in the same terms. The relief is an exemption of a receipt rather than a Chapter VI-A deduction, so it survives in both the old and the new regime and is unaffected by the choice made under the old versus new regime comparison.

Three boundaries decide the cases that go wrong.

An employee who is not a Central or State Government employee falls under serial number 14, where the deduction is the least of four figures: the cash equivalent of earned leave at credit, with entitlement not exceeding 30 days for every year of actual service; ten times the average monthly salary for the ten months immediately preceding retirement; the amount notified by the Central Government, currently Rs. 25 lakh with effect from 1 April 2023 under CBDT Notification No. 31/2023 dated 24 May 2023, raised from Rs. 3 lakh; and the payment actually received. Section 19(2)(f) caps the aggregate across tax years, and Section 19(2)(b) provides that salary here includes dearness allowance where the terms of employment so provide but excludes all other allowances and perquisites.

An employee of a local authority is not a Central or State Government employee for serial number 13 and gets only the capped relief under serial number 14. The contrast is written into the Act itself: serial number 7, which exempts commuted pension, expressly names employees of a local authority and of a statutory corporation, while serial number 13 names only the Central Government and a State Government. A municipal, panchayat or cantonment board employee is therefore outside the full exemption, and so is an employee of a public sector undertaking. The commutation of pension article covers the wider serial 7 wording.

Leave encashed while in service is taxable. Serial number 13 reaches the cash equivalent received “at the time of his retirement”. The 10 days encashed with Leave Travel Concession under Rule 38-A are received during service, so they are salary in the year of receipt, tax is deducted at source on them, and they appear in Form 16. This is the most frequently misread part of the exemption, because the computation of the encashment is identical to the retirement one.

Two further positions are settled by decisions and circulars rather than by the bare text. Encashment on resignation attracts the exemption for a government employee: the words “retirement whether on superannuation or otherwise” have been read to include resignation, in CIT v. R. V. Sahney (1986) 159 ITR 160 (Madras), the reasoning being that retirement is used in its widest sense and the manner of it is immaterial. Payment to the legal heirs of an employee who dies in harness is not taxable at all: CBDT Circular No. 309 dated 3 July 1981 clarified that the cash equivalent of leave salary received by the family of a deceased government employee is not liable to income tax, following Letter No. 35/1/65-IT(B) dated 5 November 1965 to the same effect for privilege leave, and the Income Tax Department states both on its own salary page.

Worked examples

Take an employee retiring on a basic pay of Rs. 1,00,000 a month with 300 days of earned leave at credit, at the dearness allowance rate of 60% effective from 1 January 2026. The base is Rs. 1,00,000 plus Rs. 60,000, so Rs. 1,60,000, and the day-rate is Rs. 1,60,000 divided by 30, Rs. 5,333.33. The cash equivalent is Rs. 5,333.33 times 300, Rs. 16,00,000, paid in one lump sum and deductible in full. No half pay leave enters, because earned leave alone fills the cap.

Now the mixed case. An employee on the same pay with 250 days of earned leave and 60 days of half pay leave draws Rs. 5,333.33 times 250, Rs. 13,33,333, for the earned leave. The balance to 300 is 50 days. The half pay leave salary is Rs. 50,000, the dearness allowance on it Rs. 30,000, so the day-rate is Rs. 80,000 divided by 30, Rs. 2,666.67, and 50 days give Rs. 1,33,333. The total is Rs. 14,66,667, and the remaining 10 days of half pay leave lapse.

A lower-paid case. On a basic pay of Rs. 50,000 with 100 days of earned leave, the base is Rs. 80,000, the day-rate Rs. 2,666.67, and the cash equivalent Rs. 2,66,667.

Resignation changes the arithmetic twice over. An employee on a basic pay of Rs. 1,00,000 resigning with 200 days of earned leave at credit encashes half of it, 100 days, which is within the 150-day ceiling, at Rs. 5,333.33 a day, giving Rs. 5,33,333, with no half pay leave component. The same employee resigning with 400 days at credit would be entitled to half, 200 days, but the ceiling cuts it to 150 days and Rs. 8,00,000.

In service, 10 days encashed with Leave Travel Concession on a basic pay of Rs. 1,00,000 give Rs. 5,333.33 times 10, Rs. 53,333, on which tax is deducted at source, and 10 days are debited from the earned leave account without touching the 300 days available at retirement.

How the rule reached its present shape

Rule 39 has been amended in three steps that between them explain every figure in it. DoPT Notification No. 13026/1/99-Estt.(L) dated 18 April 2002 raised the accumulation and encashment ceiling from 240 days to 300, lifted the companion threshold in the Rule 26 proviso from 225 to 285, and raised the resignation ceiling from 120 days to 150.

DoPT Notification No. 11012/1/2009-Estt.(L) dated 1 December 2009 substituted Rule 39(2)(b) and did the substantive work. Before it, half pay leave was not encashable on retirement, so an employee retiring with fewer than 300 days of earned leave simply lost the difference; and where a half pay leave component was paid, it was reduced by the pension and the pension equivalent of other retirement benefits, which frequently cut it to nothing. The 2009 substitution admitted half pay leave to fill the shortfall up to 300 days and dropped the pension-based reduction, while Rule 39(2)(c) barred commuting the half pay leave to reach the full rate. The same notification recast Rule 39(4)(a)(ii), Rule 39(5), Rule 39(6)(a)(i), Rule 39(6)(a)(iii) and Rule 39-B(2).

DoPT Notification No. 14028/1/2010-Estt.(L) dated 26 August 2011 inserted Rule 38-A and created the in-service encashment with Leave Travel Concession, with its 10-day limit, its 30-day residual balance condition, its 60-day career cap, its exclusion of house rent allowance, its rule that the days are not set against the retirement ceiling, and its refund clause with interest at 2% above the Provident Fund rate.

Nothing in Rule 39 has changed since. The DoPT consolidated CCS (Leave) Rules, 1972 updated as on 24 September 2024 print Rules 38-A to 40 in the same terms as the 2022 consolidation, and the 8th Central Pay Commission has issued no recommendation on leave encashment. What a pay commission does change is the amount: the cap is a number of days, so every revision of the pay matrix and every dearness allowance order raises the value of the same 300 days.

Related Articles

• CCS (Leave) Rules, 1972
• Earned leave
• Half pay leave
• Commuted leave
• Extraordinary leave
• Casual leave
• Leave preparatory to retirement
• Maternity leave (central government)
• Child care leave
• Dies non
• Superannuation
• Voluntary retirement
• Compulsory retirement
• Invalid pension
• Suspension
• Leave Travel Concession
• Technical resignation
• Resignation from government service
• Pay fixation on re-employment
• Leave encashment calculator
• Central government pension
• Pension calculation
• CCS (Pension) Rules, 2021
• Rule 44 pension calculator
• Gratuity for central government employees
• Death gratuity
• Gratuity calculator
• Commutation of pension
• Take-home salary for central government employees
• Dearness allowance
• House rent allowance
• Transport allowance
• Non-practising allowance
• Pay matrix
• Fundamental Rules
• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• Income tax for government employees
• Income-tax Act, 2025
• Old versus new tax regime
• Form 16
• 7th Central Pay Commission
• 8th Central Pay Commission
• Central government employees in India
• Department of Personnel and Training

External references

• Central Civil Services (Leave) Rules, 1972, consolidated by DoPT as on 24 September 2024
• Department of Personnel and Training
• DoPT circulars and orders on leave
• Department of Pension and Pensioners’ Welfare
• Income Tax Department
• Comptroller and Auditor General, frequently asked questions on the CCS (Leave) Rules

References

1. CCS (Leave) Rules, 1972, Rule 39 (cash payment in lieu of leave beyond the date of retirement, compulsory retirement or quitting of service): sub-rule (2)(a) and (b) (superannuation, combined 300-day ceiling, the two formulas), sub-rule (2)(c) (no commutation of half pay leave to make up a shortfall), sub-rule (3) (withholding on suspension or pending proceedings), sub-rule (4) (extension of service), sub-rule (5) (retirement on notice), and sub-rule (6)(a)(i) to (iii) with (6)(b) (termination, resignation, re-employment). Sub-rules (2)(b), (2)(c), (4)(a)(ii), (5), (6)(a)(i) and (6)(a)(iii) as substituted by DoPT Notification No. 11012/1/2009-Estt.(L) dated 1 December 2009; sub-rule (3) inserted by DoPT Notification No. 14028/6/81-Estt.(L) dated 17 October 1983.
2. CCS (Leave) Rules, 1972, Rule 39-A (death in service), Rule 39-B (invalidation, with sub-rule (2) excluding half pay leave for a servant not in permanent or quasi-permanent employ), Rule 39-C (order of payees), and Rule 39-D (permanent absorption in a public sector undertaking, earned leave only), the Rule 39-D Note as inserted by DoPT Notification No. 13026/3/2011-Estt.(L) dated 28 March 2012.
3. CCS (Leave) Rules, 1972, Rule 38-A (encashment of up to 10 days of earned leave with Leave Travel Concession, 30-day residual balance, 60-day career cap, exclusion of house rent allowance, no set-off against the retirement ceiling, refund with interest at 2% above the Provident Fund rate), inserted by DoPT Notification No. 14028/1/2010-Estt.(L) dated 26 August 2011.
4. CCS (Leave) Rules, 1972, Rule 3(1)(e) (date of retirement is the afternoon of the last day of the month), Rule 3(2) (undefined expressions take their Fundamental Rules meaning), Rule 9 (effect of dismissal, removal or resignation on leave at credit, with sub-rule (2) on technical resignation), Rule 26 (earned leave credit and the 300-day accumulation ceiling), Rule 29 (half pay leave credit, the 5/3 days a month proportionate credit and the dies non reduction), and Rule 40 (leave salary, with sub-rule (3) on half pay leave salary and sub-rule (7)(c) on re-employment).
5. Department of Personnel and Training Notification No. 13026/1/99-Estt.(L) dated 18 April 2002, raising the accumulation and encashment ceiling from 240 days to 300, the Rule 26 proviso threshold from 225 days to 285, and the resignation ceiling from 120 days to 150; and Notification No. 13026/1/2002-Estt.(L) dated 15 and 16 January 2004 for leave preparatory to retirement under Rule 38.
6. Department of Personnel and Training Notification No. 11020/01/2017-Estt(L) dated 11 December 2018, substituting Rule 29(1) (half pay leave credited in two instalments of 10 days).
7. Income-tax Act, 2025 (Act No. 30 of 2025), in force from 1 April 2026, Section 19(1) Table serial number 13 (entire cash equivalent of leave salary of a Central or State Government employee on retirement) and serial number 14 with Section 19(2)(b) and (f) (the capped relief for other employees); the predecessor provisions were Section 10(10AA)(i) and (ii) of the Income-tax Act, 1961.
8. Central Board of Direct Taxes Notification No. 31/2023 dated 24 May 2023, raising the notified limit for a non-government employee to Rs. 25 lakh with effect from 1 April 2023.
9. CBDT Circular No. 309 dated 3 July 1981 and Letter No. 35/1/65-IT(B) dated 5 November 1965 (cash equivalent of leave salary received by the family of a deceased employee is not liable to income tax); CIT v. R. V. Sahney (1986) 159 ITR 160 (Madras) (retirement “whether on superannuation or otherwise” includes resignation).
10. Ministry of Finance Notification No. 16(5)-E.IV(A)/74 dated 11 April 1975, the Note to Rule 39-A providing dearness allowance in addition to the cash equivalent payable to the family.
11. Department of Expenditure Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026, dearness allowance at 60% of basic pay with effect from 1 January 2026.