The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a clear clarification regarding the limits of gratuity under the National Pension System (NPS) and the benefits for employees re-employed in the civil service after military service. According to an Office Memorandum dated December 26, 2025, the government has cleared up any doubts about whether gratuity received during previous military service or Public Sector Undertaking (PSU) employment will affect benefits received after joining a new government job. This clear update comes as a relief to thousands of ex-servicemen and employees who are rejoining government service after retirement.
Who will not receive gratuity again
The new rule is quite clear for employees who have already received retirement benefits. According to Rule 4A of the Central Civil Services (Payment of Gratuity National Pension System) Amendment Rules, 2025, employees re-employed under certain categories will not receive the benefit of separate gratuity.
If a government employee has already received superannuation gratuity or retirement gratuity, they will not be entitled to separate gratuity for the period of re-employment. Similarly, those who have been dismissed or removed from service and are receiving compassionate gratuity will also not be given the fixed benefit of separate gratuity upon re-employment.
Relief for PSUs
The DoPPW has provided clarity to employees who were previously employed in an autonomous body or public sector undertaking (PSU). According to the rules, if an employee joins government service directly from a PSU with appropriate permission, they will be entitled to gratuity for the period of government service.
This gratuity will be in addition to the benefits they received from their previous autonomous body or PSU. That is, the benefits from their previous service will not interfere with their new gratuity entitlements, provided the entire process is completed according to official protocol.
Ceiling Limit on Gratuity
There is an important and crucial point here that every employee needs to understand. The department has clarified that even if an employee receives gratuity for both their previous and new service, a strict limit will apply to the aggregate amount.
The total gratuity received for both their service with the autonomous body or PSU and their current government service cannot exceed the amount they would have received if they had served in only one government service from the beginning to the end. It will be calculated based on the final emoluments at retirement and the total number of years of service. This rule ensures that gratuity payments remain within a firm limit.