The Central Government has issued a crucial clarification on the applicability of the recently enhanced gratuity ceiling of ₹25 lakh. According to a new order from the Department of Pension and Pensioners’ Welfare (DoPPW), the higher gratuity limit will apply only to Central Government civil servants governed by either the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.
This means the revised gratuity limit does not extend to employees of public sector undertakings (PSUs), banks, port trusts, the Reserve Bank of India (RBI), autonomous bodies, universities, state governments, or societies.
DoPPW Clarifies Scope of Applicability
The clarification follows several references and RTI applications received by the department seeking confirmation on whether the enhanced gratuity limit applies to institutions beyond central government departments.
The DoPPW stated that it is the nodal authority for policies relating to pension and retirement benefits for central civil employees covered under the CCS (Pension) Rules, 2021 and the CCS (Payment of Gratuity under NPS) Rules, 2021.
“These rules are not applicable to societies, banks, port trusts, RBI, PSUs, autonomous bodies, universities, or state governments,” the order stated.
It further clarified that any query regarding such organisations should be addressed to their respective administrative ministries or departments.
Background: Gratuity Limit Raised to ₹25 Lakh
The government had earlier, on May 30, 2024, notified an increase in the gratuity ceiling from ₹20 lakh to ₹25 lakh, effective January 1, 2024.
The revision followed the Dearness Allowance (DA) for central government employees crossing 50% of basic pay, which automatically triggers a 25% hike in various allowances, including retirement benefits.
This move aimed to align retirement payouts with inflation-linked salary adjustments under the 7th Pay Commission framework.
Who is Eligible for ₹25 Lakh Gratuity
Only those employees who are:
- Regular civil servants under the Central Government, and
- Covered by either the CCS (Pension) Rules, 2021 or CCS (Payment of Gratuity under NPS) Rules, 2021.
Summary
The latest DoPPW clarification makes it clear that the ₹25 lakh gratuity cap applies exclusively to central government civil servants, not employees of other government-linked institutions.
The move is intended to eliminate confusion and ensure transparency regarding retirement benefits across different categories of employees.
