Govt Raises Gratuity Limit Of Employees As Dearness Allowance Reaches 50%

As of January 1, 2024, the maximum limit for Retirement Gratuity and Death Gratuity has been raised by 25 per cent, escalating from Rs 20 lakh to Rs 25 lakh

The announcement, initially made on April 30, 2024, was subsequently halted on May 7

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The Center's recent announcement to raise its employees' dearness allowance by 4 per cent to 50 per cent has led to significant adjustments in various allowances, notably the retirement gratuity, which presents a considerable benefit for government employees. As of January 1, 2024, the maximum limit for Retirement Gratuity and Death Gratuity has been raised by 25 per cent, escalating from Rs 20 lakh to Rs 25 lakh.

“Accordingly, as per the Government's decisions in 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 per cent i.e. from Rs 20.00 Lakh to Rs 25.00 Lakh, with effect from I s' January 2024,” states an Office Memorandum (OM) dated May 30, 2024.

The announcement, initially made on April 30, 2024, was subsequently halted on May 7 with the following statement: "The circular number HRD-1/8/2024/Misc-Circulars-Part(1)/1004 dated 30.4.2024 is kept in abeyance with immediate effect."

As per the Office Order from the Ministry of Labour and Employment, Government of India, dated April 30, 2024, “As per para 6.2 of the OM no. 38/3712016-P&PW(A)(1) dated 04.08.2016 issued by Department of Pension and Pensioners' Welfare, Ministry of Personnel, Public Grievances and Pensions, Government of India, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25 per cent whenever the dearness allowance rises by 50 per cent of the basic pay. Accordingly, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25 per cent to Rs. 25 Lakh from existing Rs 20 Lakh on account of revision of Dearness Allowance payable to Central Government Employees to 50 per cent of the basic pay w.e.f 1.01.2024, subject to other conditions mentioned in the DoP&PWOM dated 04.08.2016.”

In March 2024, the central government raised the Dearness Relief (DR) and Dearness Allowance (DA) by 4 per cent. This was a huge relief for millions of central government workers and retirees. The rise in DA to 50 per cent also resulted in increases to other parts of a central government employee's pay.