The central government has issued a clarification regarding the ₹25 lakh gratuity limit, specifying that it applies exclusively to central government civil servants. This clarification aims to dispel confusion and bring transparency to pension and retirement benefits for government employees.
Who is Eligible?
The ₹25 lakh gratuity limit is applicable only to regular employees of the central government who are subject to the CCS (Pension) Rules, 2021, or the CCS (Payment of Gratuity under NPS) Rules, 2021.
Who is Not Eligible?
The increased gratuity limit does not extend to employees of other institutions or state governments. This includes employees of public sector undertakings (PSUs), banks, port trusts, the Reserve Bank of India (RBI), autonomous institutions, universities, state governments, or employees associated with societies. The Department of Pension and Pensioners Welfare (DoPPW) has clarified that the aforementioned rules are not applicable to these organizations. Any queries regarding the rules governing these organizations should be directed to the concerned organization or administrative ministry/department.
Background
The central government had previously enhanced the gratuity limit for its employees from ₹20 lakh to ₹25 lakh, effective from January 1, 2024. This decision was prompted by the Dearness Allowance (DA) for central government employees reaching 50% of their basic salary. As per established norms, all allowances are revised upwards by 25% when the DA hits 50% of the basic pay. Consequently, the Centre announced a revision in the retirement gratuity limit, along with a hike in various allowances. The announcement of the new gratuity limit was officially made via a circular issued by the Department of Pension & Pensioners Welfare on May 30, 2024.
Gratuity for Unified Pension Scheme Members
Employees covered under the Unified Pension Scheme (UPS) are eligible for two key retirement benefits:
- Lump-Sum Payment: A one-time payment upon retirement, calculated as 10% of the last drawn emoluments for every completed six-month period of service.
- Gratuity: Gratuity benefits up to ₹25 lakh, aligning with the Old Pension Scheme (OPS) benefits in cases of retirement or death.
Call for Extension to Private Sector
The Centre of Indian Trade Unions (CITU) has appealed to the Union Labour Minister to amend the Payment of Gratuity Act to extend the enhanced gratuity ceiling to private-sector workers. CITU argues that private-sector employees should also benefit from the Union government's amendments to the Central Civil Services (Pension) rules, which increased the gratuity ceiling for Union government employees to ₹25 lakh. They contend that this move would ensure parity in gratuity benefits between government employees and those in the private sector, public sector undertakings, and autonomous organizations.
