Gratuity Update 2025: The Central Government has issued a major clarification regarding gratuity. The Department of Pension and Pensioners’ Welfare (DoPPW) has clarified that only those Central Government Employees who are covered under the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021 will receive gratuity up to a maximum of Rs 25 lakh. This means that this increased limit does not apply to all institutions or employees – such as employees of PSUs, banks, port trusts, RBI, autonomous institutions, universities, state governments or societies.

The order of the Department of Pension and Pensioners Welfare said that they often receive this question – through RTI or other means – whether the payment of gratuity under CCS (Pension) Rules is applicable to societies, banks, port trusts, RBI, PSUs, autonomous institutions, universities or state governments and if not, what are the rules for these institutions. The order clarified that DoPPW is the nodal department for pension and retirement benefits of central government employees, which makes rules under the CCS (Pension) Rules, 2021 and CCS (Payment of Gratuity under NPS) Rules, 2021.

The department clarified that these rules do not apply to societies, banks, port trusts, RBI, PSUs, autonomous institutions, universities, and state governments. It further stated that anyone interested in knowing which rules apply to these institutions should contact the relevant organization or administrative ministry/department directly.

Earlier, on May 30, the government raised the gratuity limit for central government employees from Rs 20 lakh to Rs 25 lakh, effective January 1, 2024. This increase was made based on the fact that the Dearness Allowance (DA) of central government employees has now reached 50% of their basic salary. According to the rules, when DA reaches 50%, the gratuity limit is also increased along with the revision of all allowances.

Government increased gratuity limit for central employees

The Centre issued a notification on May 30 announcing an increase in the gratuity corpus for central employees from Rs 20 lakh to Rs 25 lakh, effective January 1, 2024. This decision was taken because the Dearness Allowance (DA) of central employees has now become 50% of the basic salary. According to the rules, when the DA reaches 50% of the basic salary, all allowances increase by 25%. Accordingly, the central government also revised the retirement gratuity limit and announced increases in various allowances.

Who will get gratuity of Rs 25 lakh?

Those who are regular employees of the Central Government and who are covered under the CCS (Pension) Rules, 2021 or CCS (Payment of Gratuity under NPS) Rules, 2021 are eligible for gratuity up to Rs 25 lakh. The government’s new order clarifies that the 25 lakh rupee gratuity applies only to central civil servants, not to employees of other institutions or state governments. This move is aimed at bringing transparency to pension and retirement benefits.