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News INCOME TAX

  • Jan 16, 2025
  • Government employees can get gratuity up to Rs 25 lakh: What is tax-exempt gratuity for private sector, government employees?

    Due to the hike in dearness allowance (DA) of central government employees to 50%, the gratuity limit for central government employees has increased to Rs 25 lakh from Rs 20 lakh previously. The new gratuity limit is effective from January 1, 2024. The announcement of the new gratuity limit was made in a circular issued by the Department of Pension & Pensioners Welfare under the Ministry of Personnel, Public Grievances and Pensions. The circular was issued on May 30, 2024.

    According to the department's office memorandum, "Department of Expenditure vide their OM No. 1/1/2024-E-II(B) dated 12.03.2024 has issued instructions regarding enhancement of Dearness Allowance Rates from 46% to 50% of the Basic Pay with effect from 1st January, 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, would be increased by 25% i.e., from Rs 20 lakh to Rs 25 lakh, with effect from 1st January 2024."