Government employees profit as gratuity cap hits Rs 25 lakh ahead of DA hike

Great news for central government employees! The 7th Pay Commission has made significant changes to the gratuity received by central government employees after retirement. Find out how much they will receive.

Government employees receive another boost at the start of the new year. Everyone is anticipating a Dearness Allowance (DA) hike.

Discussions are ongoing with the government regarding the formation of the 8th Pay Commission. The gratuity ceiling has been raised from Rs 20 lakh to Rs 25 lakh, effective January 1, 2024.

This adjustment follows the Dearness Allowance increase, exceeding 50%. While gratuity is tax-free for central employees, the tax-free limit for private sector employees is Rs 20 lakh. This is a significant benefit for many employees in the new year.

Gratuity is a sum of money awarded to an employee as a reward for their services to their employer. This is given when an employee retires or resigns after at least five years of continuous service.

Gratuity is calculated based on the employee's monthly salary. There are 240 working days in a year over five years. Gratuity is given upon retirement, resignation after five years, death, or disability.