Government hikes gratuity limit by 25% for Central government employees

In some good news for government employees, the Centre has decided to raise the gratuity limit of central govt employees by 25%. This comes after the Dearness Allowance was increased by 4% in March.

With this, the gratuity limit is increased from Rs 20 lakh to Rs 25 lakh and the hike is effective from January 1, 2024.

"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 ₹20.00 Lakh to ₹25.00 Lakh, with effect from 1" January 2024," Ministry of Personnel, Public Grievances & Pensions Department of Pension & Pensioners' Welfare said in an Office Memorandum.

Hike in Gratuity

Gratuity is the amount an employer pays the employee in return for services offered by him to the company. However, only those employees who have been employed by the company for five years or more are given the gratuity amount. It is given in addition to salary, pension and Provident Fund.

Earlier in March, the government approved the release of an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners. The new rate represented an increase of 4% over the existing rate of 46% of the basic pay/pension.

As per the government, the hike will cost Rs 12,868.72 crore per annum to the state exchequer and will benefit 49.18 lakh Central Government employees and 67.95 lakh pensioners across the country.

The hikes are according to the recommendations of the 7th Central Pay Commission.

Also watch: 7th Pay Commission: Central govt employees' DA may increase by 4% in March