Leave encashment is your last pay that counts for pension, divided by 30, times the days of leave encashed, up to 365 days. A BPS-18 officer retiring on a basic pay of Rs 150,250 who encashes the full 365 days gets Rs 150,250 x 365 / 30 = Rs 1,828,042.
Enter your last basic pay, any other pay that counts for pension, and the leave on full pay in your account. The calculator caps the days at 365 and, if you add your gross pay, compares encashment with going on LPR instead.
LPR or encashment: the choice at retirement
A government servant can take up to 365 days of leave preparatory to retirement (LPR) on full pay just before the date of superannuation. Or the servant can keep working until retirement and take encashment of LPR, a lump sum for those days, instead.
- Going on LPR: you stop working a year early but draw your normal monthly pay and allowances until the retirement date.
- Encashment: you work until the last day and receive a one-off payment on your pay reckonable for pension, not on the allowances.
The federal rule, rule 18-A of the Revised Leave Rules 1980, was amended on 29 August 2012 to raise the limit from 180 to 365 days. Punjab raised its limit to 365 days from 1 September 2013. If LPR is refused in the public interest, the refused leave is encashed on the same basis.
Which pay counts
Encashment is worked on the pay and allowances reckonable towards pension on your last pay certificate. The Punjab Finance Department lists this as basic pay, special pay, technical pay, personal pay and any other emolument classed as pay, plus senior post allowance.
Ad hoc relief allowances, house rent, conveyance and medical allowances do not count. So for most people the figure is simply the last basic pay, plus personal pay if they have passed the top of the scale.
Since 1 July 2026 basic pay is on the new BPS-2026 scales, which already include the old ARA-2022 and ARA-2025. That makes encashment for anyone retiring from July 2026 about 20% higher than on the old scales. The 7% ARA-2026 is not included. The salary increase calculator gives your BPS-2026 basic pay.
Worked example
A federal officer in BPS-18 retires in 2027 on a basic pay of Rs 150,250 (stage 16 of BPS-2026), with no other pensionable pay and more than 365 days of leave on full pay in the account.
- Days encashed: the account has more than 365, so 365.
- Pay per day: Rs 150,250 / 30 = Rs 5,008.33.
- Encashment: Rs 5,008.33 x 365 = Rs 1,828,042.
If the officer took LPR instead on a gross pay of Rs 260,000 a month with allowances, the year of leave would pay about Rs 3,163,333, but the officer would stop working a year earlier. Encashment is taxed as salary in the year it is paid, which can push that year into a higher slab; see the salary tax calculator.
How leave builds up
Under the federal Revised Leave Rules 1980, leave on full pay is earned at 4 days for every calendar month of duty, which is 48 days a year. Leave you take is debited from the account. The balance on the day you retire, up to 365 days, is what can be encashed. Your accounts office keeps the leave account; ask for it well before retirement.
In Punjab, the Finance Department says leave taken in the last year of service reduces the encashment in proportion, and a servant who is compulsorily retired as a penalty gets no LPR and so no encashment. To plan the dates, the retirement date calculator shows when a 365-day LPR would start.
Rules differ between the federal government and the provinces and are amended from time to time. This calculator uses the common formula of pay x days / 30. Your Accountant General's office works out the final amount from your leave account and last pay certificate.
Leave encashment questions
How is leave encashment calculated?
Take the last pay that counts for pension, usually basic pay plus any personal or special pay, divide by 30 and multiply by the days of leave encashed, up to 365. On a basic pay of Rs 100,000, 365 days give Rs 100,000 x 365 / 30 = Rs 1,216,667.
Is leave encashment on basic pay or gross pay?
On basic pay and other pay that counts for pension, such as personal pay, special pay and senior post allowance. House rent, conveyance, medical and the ad hoc relief allowances are not included. If you go on LPR instead, you draw your full pay and allowances each month.
Is leave encashment taxable in Pakistan?
Yes. It is part of salary under the Income Tax Ordinance 2001 and has no exemption. Tax is deducted when it is paid, and it counts in the income of that tax year. A large encashment in the last year of service can raise your tax rate for that year.
What are the leave encashment rules for 365 days?
Federal and Punjab rules allow encashment of up to 365 days of leave on full pay, instead of taking LPR. The federal limit rose from 180 to 365 days in August 2012 and Punjab's in September 2013. Any leave above 365 days lapses at retirement.
Can I get leave encashment if I retire voluntarily?
Punjab's Finance Department says that to get LPR encashment on retiring after 25 years' qualifying service, you must serve another 365 days after completing the 25 years. A penalty of compulsory retirement gives no LPR and so no encashment. Federal and other rules can differ, so check with your accounts office.
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Last reviewed 30 September 2026. Results are estimates; official notices always take precedence.