Centre Clarifies Rs 25 Lakh Gratuity Cap: Who’s In, Who’s Out
The central government has issued a crucial clarification stating that the enhanced gratuity ceiling of Rs 25 lakh will apply exclusively to central government civil servants, excluding employees of PSUs, banks, state governments, and autonomous bodies.
Key Takeaways
- Rs 25 lakh gratuity cap applies only to central government civil servants
- PSU, bank, RBI, state government employees excluded from enhanced limit
- 25% increase from previous Rs 20 lakh ceiling effective from January 1, 2024
- Clarification issued via Office Memorandum dated May 30, 2024
Who Gets the Enhanced Gratuity?
According to the Department of Pension and Pensioners’ Welfare (DoPPW), the revised gratuity ceiling will benefit only those covered under:
- Central Civil Services (Pension) Rules, 2021
- Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021
Excluded Employee Categories
The enhanced limit will not apply to employees of:
- Public sector undertakings (PSUs)
- Banks and financial institutions
- Port trusts
- Reserve Bank of India (RBI)
- Autonomous bodies and universities
- State governments
- Societies and other government organizations
Implementation Timeline
The government had increased the retirement and death gratuity limit by 25%, raising it from Rs 20 lakh to Rs 25 lakh. The new limit became effective from January 1, 2024, though the official announcement came through an Office Memorandum dated May 30, 2024.
The decision follows the recommendations of the 7th Pay Commission and was originally approved on April 30, 2024, before being temporarily stayed by a circular on May 7, 2024.
The DoPPW, responsible for pension policies and retirement benefits for central government employees, ensures that retirees receive their entitlements accurately and on time.
