The update for government employees is that as per rules, when Dearness Allowance (DA) reaches 50%, other allowances including gratuity automatically increase.
7th Pay Commission News: If you are also a government employee or someone in your family is in a government job, then you must know this update. The government has increased the Dearness Allowance of central employees in the month of March. After the announcement by the government, DA has increased from 46 percent to 50 percent. But the big update with this is that with the decision to increase DA to 50%, many other allowances of the employees have increased. This also includes the gratuity received at the time of retirement.
Changes occurred when dearness allowance reached 50%
The update for government employees is that as per rules, when Dearness Allowance (DA) reaches 50%, other allowances including gratuity automatically increase. There was also speculation that once DA reaches 50%, it will be merged into basic pay. But at present the government has refused to do so.
Benefit of Rs 5 lakh in gratuity
According to the earlier rules, the gratuity given after 33 or more years of service used to be 16 and a half times the basic salary and dearness allowance (DA). But the maximum amount was Rs 20 lakh. Now DA has increased to 50% and the limit of gratuity has been increased by 25% to Rs 25 lakh. This means that now government employees can get Rs 5 lakh more gratuity than before. In the notification of the Labor Ministry issued on April 30, 2024, it was said that whenever dearness allowance becomes 50% of the basic salary, the gratuity increases by 25%.
Tax benefit on gratuity
Income tax is not levied on gratuity received by government employees. This exemption is not only for Central Government employees but also for State Government employees and local body employees. The government had issued an order in March 2019 regarding the limit of tax exemption on gratuity to government employees. At that time it was told that there would be no tax on gratuity up to Rs 20 lakh. This relaxation is applicable to employees who retire, die, resign or become disabled on or after March 29, 2018.
Benefit in HRA also
Employees will also get the benefit of increase in dearness allowance in the form of rental allowance (HRA). After the increase in DA, dearness allowance of central employees living in X, Y and Z category cities has been increased. Apart from this, as per the orders of the Ministry of Personnel, if the dearness allowance is 50 percent, the limit of children’s education allowance and hostel subsidy will also increase. Both of these will automatically increase by 25 percent. The ministry said that in view of the increase in DA of central employees from January 1, 2024, information is being sought about the amount of children’s education allowance and hostel subsidy.
