Dearness Allowance amount to calculate Gratuity, Leave Encashment of Central Government pensioners changed!

Gratuity, Leave Encashment Calculation of Retired Central Government Employees: As per Central Civil Services (Pension) Rules 1972, DA on the date of retirement or death is reckoned as emoluments for the purpose of calculation of gratuity.

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Gratuity, Leave Encashment Calculation of Retired Central Government Employees: The Central Government has revised the percentage of Dearness Allowance (DA) to be considered for calculation of Gratuity and Leave Encashment of Central Government Employees who retired between 1st January 2020 and 30th July 2021.

As per the existing provisions of the Central Civil Services (Pension) Rules 1972, DA on the date of retirement or death is reckoned as emoluments for the purpose of calculation of gratuity. Also, pay admissible on the date of retirement plus DA on that are reckoned for the purpose of calculation of cash payment in lieu of leave.

In view of the provisions of the orders of Finance Ministry on 23rd April 2020 and 20th July 2021, the calculation of gratuity and cash payment in lieu of leave in respect of Central Government employees, who retired on or after 1st January 2020 and up to 30th June 2021, was required to be made based on the rate of DA at 17% of basic pay.

However, the Ministry has revised the percentage of the DA to be used for calculation of Gratuity and Leave Encashment.

“Keeping in view that gratuity and cash payment in lieu of leave are one-time retirement benefits admissible to employees on retirement and employees who retired during the period from 01.01.2020 to 30.06.2021 have been allowed lesser amount than what would have been calculable but for the aforesaid orders of this Ministry dated 23.04.2020 and 20.07.2021, the matter has been considered sympathetically with a view to allowing the same to such employees,” the Department of Expenditure (DoE), Ministry of Finance said in an Office Memorandum dated 7th September 2021.

New percentage of DA for calculation of Gratuity, leave encashment

  • For employees retiring from 1st January 2020 to 20th June 2020: Now 21% of basic pay is the notional percentage of DA to be used for calculation of Gratuity and Leave Encashment
  • For employees retiring from 1st July 2020 to 31st December 2020: Now 24% of basic pay is the notional percentage of DA to be used for calculation of Gratuity and Leave Encashment
  • For employees retiring between 1st January 2021 to 30th June, 2021: Now 28% of basic pay is the notional percentage of DA to be used for calculation of Gratuity and Leave Encashment.

The Central Government had increased DA to 28% of basic pay for Central Government Employees this year.

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