The central government has issued a major clarification regarding gratuity payments. The Department of Pension and Pensioners’ Welfare (DoPPW) has clarified through an order that only those central government civil servants who fall under the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021 will receive a maximum gratuity of up to Rs 25 lakh.
This means that this increased gratuity limit will not apply to all institutions or employees — such as 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 DoPPW order has said that it keeps “receiving references/RTI applications etc seeking clarification whether the above referred OM/payment of gratuity under CCS (Pension) Rules is applicable on societies, banks, ports trusts, RBI, PSU, autonomous bodies, Universities state governments etc and if not under which rules these organisations are governed”.
The DoPPW is the nodal department for formulation of policies relating to pension and other retirement benefits of Central Government civil employees covered under the Central Civil Services (Pension) Rules, 2021 and Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, the order said.
The department made it clear that “these rules are not applicable” to societies, banks, ports trusts, RBI, PSU, autonomous bodies, Universities state governments etc. It further said that “any query on the subject including one i.e. under which rules such organisations are governed should be addressed to the concerned organisation/concerned administrative ministry/department”.
Gratuity limit hiked for central govt staff to Rs 25 lakh from Rs 20 lakh last year
The Centre issued a notification on May 30, enhancing the gratuity limit for central government employees from 20 lakh to Rs 25 lakh, effective January 1, 2024. The decision was taken after the Dearness Allowance (DA) for central government employees reached 50% of the Basic salary. As per norms, all allowances get revised upwards by 25% on DA hitting 50% of the Basic pay for central government employees. In line with rules, the Centre announced a revision in retirement gratuity limit as well, along with a hike in various allowances.
Who is eligible for a gratuity up to Rs 25 lakh?
Civil servants who are regular employees of the central government and are subject to the CCS (Pension) Rules, 2021, or the CCS (Payment of Gratuity under NPS) Rules, 2021.
Summing up…
This new government order clarifies that the Rs 25 lakh gratuity limit applies only to central civil servants, not to employees of other institutions or state governments. This step is aimed at bringing transparency to pension and retirement benefits.