New Delhi: In a big bonanza for central government employees, the Centre has now announced a 25 per cent hike in their gratuity to Rs 25 lakh from Rs 20 lakh earlier, with effect from January 1, 2024. This follows a 4 per cent hike in the dearness allowance for government employees. The gratuity revision was announced in an office memorandum dated May 30, 2024. The new rule will apply under the Central Civil Services (Pension) Rules, 2021 as well as the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021.
What is gratuity?
Gratuity is a benefit provided to government employees who have completed at least 5 years of service. This benefit is provided in addition to pension and PF provisions. The gratuity rule has been approved following March 7, 2024, Cabinet approval for additional instalments of DA for current employees as well as dearness relief for government pensioners. This amendment had hiked the DA/DR rate to 50 per cent from 46 per cent earlier, which would cost Rs 12,868 crore to the government exchequer. Apart from the DA hike, government employees also received a 25 per cent hike in:
Transport allowance
Canteen allowance
Deputation allowance
The house rent allowance (HRA) for central government employees was raised to 30 per cent, 20 per cent, and 10 per cent from 27 per cent, 19 per cent and 9 per cent, earlier.
The revised gratuity limit will come into effect from January 1, 2024. Govenrment employees’ gratuity is fully exempted from paying tax at the end of service, whether due to termination, retirement or superannuation. Gratuity is calculated based on the following calculation:(15 x last drawn salary x working tenure)/ 30. The move is expected to benefit over 49.18 lakh central government employees.
DA/ DR is calculated based on the the Consumer Price Index – Industrial Workers. In October 2023, the Centre announced a 4 per cent hike in DA/DR to 46 per cent, which was hiked again in March 2024 to 50 per cent.
In a major relief to central government employees and retired pensioners, the Centre has hiked the gratuity limit by 25 per cent, months after hiking the dearness allowance for current employees and dearness relief for pensioners by 4 per cent to 50 per cent. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
