NPS Gratuity Rules: The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a very important clarification regarding the limit on the amount of gratuity under the National Pension System (NPS) and separate gratuity for military service. The Office Memorandum dated December 26, 2025, aims to clear the confusion regarding whether gratuity taken for previous military service affects the eligibility for gratuity after re-employment in the civil services. According to a report in the Economic Times, the DoPPW has specified the conditions under which a re-employed government employee will not get separate gratuity.
In an order, the government has clarified the circumstances in which government employees can and cannot be paid a second gratuity. This decision is particularly important for employees who have rejoined government service after retirement or joined the central government from a public sector undertaking (PSU).
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What is the latest order on gratuity?
The Department of Pension and Pensioners’ Welfare (DoPPW) has stated in its Office Memorandum that gratuity will be considered a “one-time terminal benefit” for government employees covered under the NPS. This means that if an employee has already received gratuity once after retirement, compulsory retirement, or on compassionate grounds, he will not receive it a second time upon re-employment after retirement. The government says that gratuity is the final benefit an employee receives after the end of service. Therefore, separate gratuities cannot be given for each service period.
These employees may get gratuity for the second time
If an employee previously worked for a Public Sector Undertaking (PSU) or autonomous body and, after receiving gratuity there , joins the Central Government service with the necessary approval, they may receive a separate gratuity for their government service. However, a condition applies: the total gratuity will be the same as the full-time Central Government service.
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How will gratuity be added?
The DoPPW has also clarified how previous government service will be factored into gratuity for central government employees covered under the NPS. For example, if an employee previously served in a state government and received gratuity for that service, then later joins the central government and wishes to receive separate gratuity, they can receive gratuity from both positions, but within a certain limit.