Gratuity is a bulk
amount paid by the employer to his/her employee for his/her service at the time
of retirement under the Gratuity Act 1972 .
7th Pay Commission
Gratuity
Death, Retirement
and Service Gratuity for CG Employees
What is Gratuity in
Central Government Services?
Gratuity is a
hidden savings of employees working in Government Service. Gratuity amount is
calculated depends upon his period of service. The bulk amount of Gratuity is
usually paid at the time of retirement. In some cases, it can be paid before as
per existing rules.
How to calculate
Gratuity?
Calculation of Gratuity = [ (Basic Pay +
Dearness Allowance) x 15 days x Number of Years of Service ] / 26 Days.
Why calculating
taken 26 Days instead of 31?
As per the labour
law in India, the maximum working days in a month should be 26. Weekly holiday
should be given to employees is compulsory.
What is the ceiling
of Gratuity?
The 7th pay
commission recommended to enhance the ceiling of Gratuity from Rs. 10 lakh to
20 lakh.
There are three
types of Gratuity in force in Government services…
Retirement Gratuity,
Death Gratuity &
Service
Gratuity
Retirement Gratuity
This is payable to
the retiring Government servant. A minimum of 5 years’ qualifying service and eligibility
to receive service gratuity / pension is essential to get this one time lump
sum benefit. Retirement gratuity is calculated @ 1/4th of a months Basic Pay
plus Dearness Allowance drawn on the date of retirement for each completed six
monthly period of qualifying service.
There is no
minimum limit for the amount of gratuity. The retirement gratuity payable for
qualifying service of 33 years or more is 16 times the Basic Pay plus DA,
subject to a maximum of Rs. 20 lakhs.
Death Gratuity
This is a one-time
lump sum benefit payable to the nominee or family member of a Government
servant dying in harness. There is no stipulation in regard to any minimum
length of service rendered by the deceased employee. Entitlement of death
gratuity is regulated as under:
|
Qualifying
Service
|
Rate
|
|
Less than one year
|
2 times of basic pay
|
|
One year or more but less than 5
years
|
6 times of basic pay
|
|
5 years or more but less than 11
years
|
12 times of basic pay
|
Maximum amount of
Death Gratuity admissible is Rs. 20 lakhs w.e.f. 1.1.2016
Service Gratuity
A retiring
Government servant will be entitled to receive service gratuity (and not
pension) if total qualifying service is less than 10 years.
Admissible amount
is half months basic pay last drawn plus DA for each completed 6 monthly period
of qualifying service. This one time lump sum payment is distinct from
retirement gratuity and is paid over and above the retirement gratuity.
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