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No.4 (1)/2001/D (Pay/Services)
Government of India
Ministry of Defence
New Delhi, dated 1st March 2004.

To

The Chief of the Army Staff,
The Chief of the Naval Staff,
The Chief of the Air Staff

Subject : Encashment of leave in respect of Defence Services personnel at the time of                   superannuation-elements of pay to be taken into account.

Sir,

            I am directed to refer to this Ministry's letter No. A/49116/AG/PS2(b)/7079/D (AG) dated 21st July,1978, No. A/38709/AG/PS3(b)/5722/D (Pay/Services) dated 20th Nov,1978, and No. 15(3)/82/1711-B/D (AG) dated 31st mar,1983 on the above subject and to say that in pursuance to the recommendations of the Vth CPC, the issue of relevance of Pay to be taken into account for the purpose of the Leave encashment at the time of superannuation has been examined in consultation with the department of Personnel and Training and The Ministry of Finance. It has been decided that the only Pay on the lines defined in the FR 9(21)(A) (i) to (iii) may be taken into account for calculating the amount of encashment of leave. Stagnation increments, Non-Practicing allowances and Rank Pay of Officers shall be included by calculating the amount of leave encashment. Other elements such as the erstwhile Flying Pay, Submarine Pay, Technical Pay etc. including all kind of special "Pays" which has been converted into "Allowances" in pursuance to Vth CPC recommendations, shall not be taken into account in calculating the amount of leave encashment.

2. These clarification shall take effect immediately. Leave encashment claims of Defence service personnel including those pending of date of issue of this letter may be settled in the light of these clarifications. Cases in which payments have already be made shall, however, not be reopened on this account.

3. This issue with the concurrence of Ministry of Defence/ Finance (AG/PA) vide their U.O. no. 1329/AG/PA dated 24th Dec,2003 and in consultation with Ministry of Finance, Department of Expenditure vide their U.O. No. 562/EB/2001 dated 12-07-2001 and the Department  of Personnel and Training vide their U.O. no. 14028/1/2001-Estt(L) dated 13-8-2001, No. 14028/1/2002-Estt(L) dated 7-5-2002 and 14028/5/2002-Estt(L) dated 18-8-2003.

Yours Faithfully                          

R K Grover                              
Under Secretary to the Government of India