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Retirement Gratuity: How It Is Calculated and the Ceiling
The Formula
- You must have completed five years' qualifying service and be eligible for service gratuity or pension (CCS (Pension) Rules 2021, Rule 45(1)(a), PDF p. 74).
- Retirement gratuity is one-fourth of your emoluments for each completed six-monthly period of qualifying service, subject to a maximum of 16.5 times the emoluments (CCS (Pension) Rules 2021, Rule 45(1)(a), PDF p. 74).
- A fraction of a year of three months or more counts as a completed six-monthly period (CCS (Pension) Rules 2021, Rule 45(4), PDF p. 75).
- If your qualifying service is four years and nine months or more but less than five years, it is treated as five years (CCS (Pension) Rules 2021, Rule 45(5), PDF p. 75).
- If the amount has a fraction of a rupee, it is rounded up to the next rupee (CCS (Pension) Rules 2021, Rule 45(1), second proviso, PDF p. 74).
In short: gratuity = emoluments x 1/4 x number of completed six-monthly periods. Since 66 six-monthly periods give 16.5 times, service beyond 33 years does not raise the multiple.
What Counts as Emoluments
- Emoluments means basic pay as defined in FR 9(21)(a)(i) that you were drawing immediately before retirement, plus non-practising allowance for medical officers. Stagnation increment also counts (CCS (Pension) Rules 2021, Rule 31(1), PDF p. 44).
- For gratuity, the dearness allowance admissible on the date of retirement is also treated as emoluments (CCS (Pension) Rules 2021, Rule 45(6), second proviso, PDF p. 75).
- If your emoluments were reduced during the last ten months of service, average emoluments are used instead (CCS (Pension) Rules 2021, Rule 45(6), first proviso, PDF p. 75).
The Rs 25 Lakh Ceiling
- The rule as printed in 2021 capped retirement and death gratuity at Rs 20 lakh (CCS (Pension) Rules 2021, Rule 45(1), first proviso, PDF p. 74).
- The Government accepted the 7th CPC recommendation that the gratuity ceiling may rise by 25% whenever DA rises by 50% (DoPPW Resolution 04.08.2016, item 8, PDF p. 6).
- After DA rose from 46% to 50% from 1 January 2024, DoPPW raised the maximum retirement gratuity and death gratuity by 25%, from Rs 20 lakh to Rs 25 lakh, with effect from 1 January 2024. This covers both the CCS (Pension) Rules, 2021 and the CCS (Payment of Gratuity under NPS) Rules, 2021 (DoPPW OM dated 30.05.2024, para 3, PDF p. 1).
| Example | Emoluments (pay + DA) | Six-monthly periods | Formula result | Payable |
|---|---|---|---|---|
| A | Rs 1,20,000 | 66 (33 years) | Rs 19,80,000 | Rs 19,80,000 |
| B | Rs 2,00,000 | 66 (33 years) | Rs 33,00,000 | Rs 25,00,000 (ceiling) |
These are worked illustrations of the formula, not official figures.
If You Are Under NPS
- NPS employees get retirement gratuity under a separate set of rules, with the same formula: one-fourth of emoluments for each completed six-monthly period, up to 16.5 times emoluments (CCS (Payment of Gratuity under NPS) Rules 2021, Rule 22(1), PDF p. 28).
- The amended text of those rules caps retirement or death gratuity at twenty five lakh rupees and counts DA on the date of retirement as emoluments (CCS (Payment of Gratuity under NPS) Rules 2021, Rule 22(2) proviso and 22(3), PDF p. 29).
Where to Check
Read Rules 31 and 45 of the CCS (Pension) Rules, 2021 (CCS (Pension) Rules 2021, Rule 45, PDF p. 74) with the DoPPW OM dated 30.05.2024 (DoPPW OM dated 30.05.2024, PDF p. 1).
The CCS (Pension) Rules, 2021 cover civilian Government servants in the Defence Services, but not railway servants (CCS (Pension) Rules 2021, Rule 2 and 2(a), PDF p. 12) or members of the All India Services (CCS (Pension) Rules 2021, Rule 2(e), PDF p. 13). Railway staff, AIS officers and armed forces personnel should check their own rules.
Related Questions
What is the maximum retirement gratuity for central government employees?
Rs 25 lakh, with effect from 1 January 2024, under the DoPPW OM dated 30.05.2024. Within that cap, the formula also limits gratuity to 16.5 times your emoluments (Rule 45(1)(a)).
Is DA included when calculating gratuity?
Yes. The dearness allowance admissible on the date of retirement is treated as emoluments for gratuity (Rule 45(6), second proviso).
How many years of service do I need for retirement gratuity?
Five years of qualifying service (Rule 45(1)(a)). Service of four years and nine months or more is treated as five years (Rule 45(5)).
Does an extra three months of service count?
Yes. A fraction of a year of three months or more is treated as a completed six-monthly period (Rule 45(4)).
Do NPS employees get retirement gratuity?
Yes, under the CCS (Payment of Gratuity under NPS) Rules, 2021, on the same one-fourth formula and the Rs 25 lakh ceiling (Rule 22).
Official Sources
- Central Civil Services (Pension) Rules, 2021 (DoPPW book edition, December 2021) · Department of Pension and Pensioners' Welfare, Government of India
- DoPPW OM No. 28/03/2024-P&PW(B)/Gratuity/9559 dated 30.05.2024: Enhancement of maximum limit of Gratuity on DA reaching 50% · Department of Pension and Pensioners' Welfare, Government of India
- DoPPW Resolution No. 38/37/2016-P&PW(A) dated 04.08.2016 on 7th CPC recommendations on pension and retirement benefits · Department of Pension and Pensioners' Welfare, Government of India
- Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021 (as amended up to 24.04.2025) · Department of Pension and Pensioners' Welfare, Government of India
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This article explains the official rules as published; it is not legal advice. Check the cited document, and your own department's orders, before acting.