The central government has given a substantial gift to its employees by significantly increasing the gratuity amount. After raising the dearness allowance for central employees by 4 percent, the government has now boosted the gratuity for retiring employees by 25 percent. According to the Office Circular (OM) dated May 30, 2024, and based on the 7th Pay Commission’s recommendations, the government has increased the maximum limit of retirement gratuity from Rs 20 lakh to Rs 25 lakh. This increase will take effect from January 1, 2024. Previously, the government made this announcement on April 30, 2024, but it was put on hold on May 7.

According to the office order dated April 30, 2024, from the Ministry of Labor and Employment, Government of India, “Office Memorandum No. 38/37/2016 dated 04.08.2016 issued by the Department of Pension and Pensioners’ Welfare, Ministry of Personnel, Public Grievances and Pensions, Government of India, Para 6.2 of P&PW (A) (1) states that whenever the dearness allowance increases by 50% of the basic pay, the maximum limit of retirement gratuity and death gratuity will increase by 25%. Consequently, they have increased the maximum limit of gratuity from Rs 20 lakh to Rs 25 lakh.

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In March 2024, the central government increased Dearness Allowance (DA) and Dearness Relief (DR) by 4%, providing significant relief to lakhs of central government employees and pensioners. With the DA increase reaching 50%, various components of the central government employees’ salaries have also risen.

Employers provide gratuity as a benefit scheme to employees who have completed at least five years of continuous service. Under the Payment of Gratuity Act, 1972, employees who render continuous service in an organization for five years or more are eligible to receive gratuity.

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