7th Pay Commission DA hike impact: Gratuity limit hiked after being put on hold; details here – Times of India

7th Pay Commission news: The central government’s decision to raise the dearness allowance for its employees by 4%, bringing it to a total of 50%, has led to significant changes in various allowances, including retirement gratuity. This increase is a substantial benefit for government workers.
ET quoted the latest per the Office Memorandum (OM) dated May 30, 2024, “Accordingly, as per the Government’s decisions in implementation_ of the recommendations of the Seventh CPC, the maximum limit of Retirement Gratuity and Death Gratuity under the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, would be increased by 25% i.e.from Rs 20.00 Lakh to Rs 25.00 Lakh, with effect from I s’ January 2024.”
This means that the upper limit for both Retirement Gratuity and Death Gratuity will be raised by 25%, from Rs 20 lakh to Rs 25 lakh, starting from January 1, 2024.
The same announcement was initially made on April 30, 2024, but was temporarily suspended on May 7 with the following statement: “The circular number HRD-1/8/2024/Misc-Circulars-Part(1)/1004 dated 30.4.2024 is kept in abeyance with immediate effect.”

The Office Order dated April 30, 2024, issued by the Ministry of Labour and Employment, Govt of India, stated, “As per para 6.2 of the OM no. 38/3712016-P&PW(A)(1) dated 04.08.2016 issued by Department of Pension and Pensioners’ Welfare, Ministry of Personnel, Public Grievances and Pensions, Government of India, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25% whenever the dearness allowance rises by 50% of the basic pay. Accordingly, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25% to Rs. 25 Lakh from existing Rs 20 Lakh on account of revision of Dearness Allowance payable to Central Government Employees to 50% of the basic pay w.e.f 1.01.2024, subject to other conditions mentioned in the DoP&PWOM dated 04.08.2016.”
The government announced a 4% increase in the dearness allowance (DA) and dearness relief (DR) in March 2024, providing much-needed assistance to a large number of central government employees and pensioners. This increase brought the DA to 50%, which also led to a rise in various components of a central government employee’s salary.
Gratuity is a benefit plan provided by employers to employees who have worked continuously for a minimum of five years.
According to the Payment of Gratuity Act, 1972, an employee is eligible to receive gratuity after rendering continuous service for at least five years with an organization. Gratuity is payable to the employee under the following conditions:
a) Upon superannuation, or
b) Upon retirement or resignation
However, there is one exception to the requirement of continuous service for five years to receive gratuity.