Centre Increases Gratuity Limit For Govt Employees By 25%
This decision follows a recent 4% hike in the Dearness Allowance (DA) announced in March
In a positive development for government employees, the Central Government has decided to increase the gratuity limit for its employees by 25 per cent. This decision follows a recent 4 per cent hike in the Dearness Allowance (DA) announced in March.
The gratuity limit has now been raised from ₹20 lakh to ₹25 lakh, effective from 1 January 2024. The Ministry of Personnel, Public Grievances & Pensions, Department of Pension & Pensioners' Welfare, stated in an Office Memorandum: "As per the Government's decisions in the implementation of the recommendations of the Seventh CPC, the maximum limit of Retirement Gratuity and Death Gratuity under the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, would be increased by 25%, i.e., from ₹20 lakh to ₹25 lakh, with effect from January 1, 2024."
Gratuity is a sum paid by an employer to an employee as a token of appreciation for their services to the company. It is awarded to employees who have served the company for five years or more, in addition to their salary, pension, and Provident Fund.
In March, the government had approved the release of an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, which marked a 4% increase from the previous rate of 46 per cent of the basic pay/pension.
The government estimates that this gratuity increase will cost the state exchequer ₹12,868.72 crore per annum and will benefit 49.18 lakh Central Government employees and 67.95 lakh pensioners nationwide. These hikes align with the recommendations of the 7th Central Pay Commission.
