Leave Encashment Calculator Pakistan — Government LPR

Take your monthly basic pay, multiply by 12 and divide by 365 to get your daily rate, then multiply by the leave days you are encashing — Basic Pay × 12 × Days ÷ 365. Only earned leave on full pay counts, and only up to 365 days can be encashed as leave preparatory to retirement (LPR). So 365 days of refused LPR equals exactly one year’s basic pay. Leave is earned at 4 days for every calendar month of duty under Rule 3 of the Revised Leave Rules 1980, which is 48 days a year.

Punjab Finance Department Notification No. FD.SR.II/2-97/2019, dated 1 June 2023, amended Rule 17 of the Revised Leave Rules 1981. Since then, encashment is paid only for LPR that was applied for in writing at least 3 months before it started and then refused, it is paid at the initial pay of the pay scale instead of the last pay drawn, and it is paid monthly — one initial-pay instalment per month of the refused LPR period, in addition to monthly pay — not as a lump sum (clarified by the Finance Department on 9 September 2024). There is no encashment on compulsory retirement, and none if the employee dies in service. Employees whose LPR period started before 1 June 2023 keep the old lump sum rule up to 31 May 2023.

Yes, for leave preparatory to retirement. LPR itself is capped at 365 days, and encashment covers only the refused part of it, up to 365 days. Leave above 365 days at your credit is not paid for. Under the federal rules you must also opt for encashment 15 months before superannuation or completing 30 years of qualifying service, and you cannot take other leave in the last 15 months (or 12 months, if your balance is above 365 days) without reducing the encashable balance. Your department’s leave account record is the final record of your balance.

For a government employee, yes: encashment of leave preparatory to retirement is exempt from income tax under clause (19) of Part I of the Second Schedule to the Income Tax Ordinance 2001, and that covers federal and provincial government employees. For a private-sector employee there is no such exemption — the encashment is taxable as salary under Section 12 in the year it is received, although FBR allows a reduced computation for payments received on separation. This calculator shows Rs 0 tax for the government modes and flags the private-sector figure as before tax.

You have to apply. Under the federal Revised Leave Rules 1980 (Rule 18-A), you opt for encashment 15 months before superannuation or completing 30 years of qualifying service; premature retirement after 31 years needs 3 months’ notice. In Punjab since 1 June 2023 you must submit a written application for LPR at least 3 months before it starts, and only the part the appointing authority refuses is encashed. Without the application and the refusal, there is no encashment — it is not automatic.

Under the federal rules (Rule 19 of the Revised Leave Rules 1980), if a civil servant dies or is permanently disabled for further service, the family is paid a lump sum equal to leave pay of up to 365 days out of the leave at his credit. Punjab’s 1 June 2023 amendment removed that: there is no encashment of leave for a Punjab government servant who dies during service, and no encashment on compulsory retirement. Private-sector treatment depends on the employer’s policy and the contract.