Good news for Central Govt employees! Gratuity limit RAISED to Rs 5 lakh! DA hike 50% - Check details

06/05/2024

good news for central govt employees! gratuity limit raised to rs 5 lakh! da hike 50% – check details

Good news for Central Govt employees! In March 2024, the Central government announced a 4% increase in dearness allowance (DA) and dearness relief (DR), providing significant relief to millions of central government employees and pensioners. This hike to 50% in DA triggered various adjustments in the components of a central government employee’s salary. Notably, the government raised the rent allowance (HRA) for employees residing in X, Y, and Z category cities. Additionally, the tax exemption limit on gratuities for central government employees was raised from Rs 20 lakh to Rs 25 lakh.

Moreover, the government increased the maximum limit of retirement and death gratuities by 25% in accordance with the rise in DA to 50%. As per an Office Order from the Ministry of Labour and Employment, Government of India, dated April 30, 2024, the maximum limit for retirement and death gratuities was increased to Rs 25 lakh from the existing Rs 20 lakh, effective January 1, 2024. This adjustment was made based on the revision of Dearness Allowance to 50% of the basic pay.

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Gratuity, as defined by the Payment of Gratuity Act, 1972, is a benefit provided by the employer to an employee who has rendered continuous service for five years or more. It is payable upon the employee’s superannuation, retirement, or resignation. However, there are exceptions where the condition of continuous service for five years is not applicable.

Following the DA hike, certain allowances such as Children’s Education Allowance (CEA) and Hostel Subsidy also received revisions of up to 25%. According to an Office Memorandum from the Ministry of Personnel, Public Grievances and Pensions, Department of Personnel & Training, dated April 25, 2024, the revised limits for CEA and Hostel Subsidy were announced. Government employees will receive a predetermined monthly reimbursement for Children’s Education Allowance and Hostel Subsidy, regardless of actual expenditures.

For Divyang children, the reimbursement amount is double the standard allowance, fixed at a certain amount per month. Additionally, the Special Allowance for Child Care for women with disabilities has been revised to a specified amount per month, subject to certain conditions. These revisions came into effect from January 1, 2024.

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