The Department of Pension and Pensioners’ Welfare under the Ministry of Personnel, Public Grievances and Pensions of the Central Government has issued an important Office Memorandum (OM) regarding gratuity for employees covered under the National Pension System (NPS). It clarifies when the limit on gratuity will apply for different services and when it will not.
What does Rule 4A say on gratuity eligibility?
According to the OM, Rule 4A of the CCS (Payment of Gratuity under NPS) Amendment Rules, 2025, stipulates that if a government employee has worked in both Central Government service and a PSU/Autonomous Body and receives separate gratuity from both, then a limit will apply to the total gratuity.
Understand the two important conditions:
Case of Re-employment
If an employee is re-employed in government service after receiving retirement/compulsory retirement/compassionate gratuity, then generally, they will not receive separate gratuity for the re-employment period.
“In accordance with rule 4A of the Central Civil Services (Payment of Gratuity National Pension System) Amendment Rules, 2025, a Government servant who, having retired on superannuation gratuity or retiring gratuity or compulsory retirement gratuity or who is in receipt of a compassionate gratuity on having been dismissed or removed from service, is subsequently re-employed, shall not be entitled to a separate gratuity for the period of his re-employment…,” the ministry’s OM clarified.
Relief when moving from PSU/Autonomous Body to Government Service
If an employee was previously in a PSU or autonomous body and joined the Central Government service after obtaining due permission from there, then:
They will receive gratuity for their government service, and the gratuity received from the previous PSU/autonomous body will also remain.
However, the total gratuity from both sources cannot exceed the amount that would be payable based on the total service (PSU + Government) and the salary at the time of retirement from government service.
Rule for State Government + Central Government Service
The department has also referred to the old instructions dated February 12, 2020. According to this, if an employee has received gratuity separately for both state government and subsequently central government services, then:
The limit will apply to the total gratuity, and this limit cannot exceed the gratuity the employee would have received if they had worked continuously in the central government and retired at the same final salary.
Military service followed by civil service: Big clarity
The most important part of this OM concerns employees who have served in the military and then joined the civil service. The department had received several queries on this matter.
The government, after consulting with the Department of Expenditure, has clarified that if a person is re-employed in the civil service after military service, and has already received gratuity for their military service, then the gratuity for the civil service (under NPS/CCS rules) will not be subject to any limit due to the military gratuity. That is, the civil service gratuity will not be reduced based on the military service gratuity.
Summing up…
This clarification from the government resolves the doubts of many employees covered under NPS. Specifically, the limit has been clarified for those joining the government from PSUs/Autonomous Bodies, and those who have served in the military and then joined the civil service have received significant relief, as there will be no additional deduction from their civil service gratuity. This circular makes the rules clearer and easier to understand for both employees and pensioners.