The central government has given another gift to its employees. After increasing the Dearness Allowance (DA) by 4 per cent, the government has now decided to raise the gratuity limit. The retirement and death gratuity limit has been increased by 25 per cent. This raises the limit from Rs 20 lakh to Rs 25 lakh. The new gratuity limit will be effective from January 1, 2024.
An Office Memorandum dated May 30, 2024, announced this decision. This follows the recommendations of the 7th Pay Commission. The maximum limit for retirement 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, is now Rs 25 lakh. The decision was originally made on April 30, but it was stayed by a circular on May 7.
Gratuity is a reward given by a company to an employee who has worked for a long time. It is given in addition to salary, pension and Provident Fund (PF). An employee is entitled to gratuity only if they have worked for at least five years in the company.
On March 7, the Union Cabinet approved the release of an additional instalment of Dearness Allowance (DA) to Central government employees. Dearness Relief (DR) for pensioners was also approved. This increase of 4 per cent over the existing rate of 46 per cent of the Basic Pay/Pension is to compensate for the rise in prices.
With the increase in DA, other allowances such as transport allowance, canteen allowance and deputation allowance were also increased by 25 per cent. The combined impact on the exchequer from both DA and DR increases will be Rs 12,868.72 crore per annum. This decision benefits about 49.18 lakh Central Government employees and 67.95 lakh pensioners. The increase in gratuity and allowances aims to provide financial security and keep up with the rising cost of living.
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