The maximum limit of gratuity has been increased by 25 per cent from Rs 20 lakh to Rs 25 lakh. Gratuity is a benefit scheme given by the employer to the employee for rendering continuous service for five years or more.
Gratuity Hike: Central government has given a big gift to its employees. After increasing the dearness allowance of central employees by 4 percent, the government has now made a big increase in the amount of gratuity. Let us tell you that the government has increased the gratuity of the retiring employee by 25%. According to the Office Circular (OM) dated May 30, 2024, as per the recommendations of the 7th Pay Commission, the maximum limit of retirement gratuity has been increased by 25 per cent from Rs 20 lakh to Rs 25 lakh. This will be effective from January 1, 2024. Earlier, the same was announced on April 30, 2024, but was stopped on May 7.
What was the order given by the Ministry of Labor?
According to the Office Order dated April 30, 2024 of the Ministry of Labour and Employment, Government of India, “As per Para 6.2 of OM No. 38/3712016-P&PW(A)(1) dated 04.08.2016 issued by the Department of Pension and Pensioners Welfare, Ministry of Personnel, Public Grievances and Pensions, Government of India, whenever the dearness allowance increases by 50% of the basic pay, the maximum limit of retirement gratuity and death gratuity shall increase by 25%. Accordingly, the maximum limit of retirement gratuity and death gratuity has been increased by 25% from Rs 20 lakh to Rs 25 lakh.
DA was increased by 4%
The central government had increased dearness allowance (DA) and dearness relief (DR) by 4% in March 2024. This was a big relief for lakhs of central government employees and pensioners. With the DA increasing to 50%, various components of the salary of the central government employee have also increased.
What is gratuity?
Gratuity is a benefit scheme given by the employer to the employee for providing continuous service for five years or more. As per the Payment of Gratuity Act, 1972, if an employee provides continuous service for at least five years in an organization, he can get gratuity.
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