Gratuity Rules: DoPPW Clarifies Who Falls Outside The Enhanced Limit Of Rs 25 Lakh

The Department of Pension & Pensioners' Welfare (DoPPW) issued a clarification on the applicability of the enhanced gratuity limit of Rs 25 lakh. The retirement and death gratuity limit was previously Rs 20 lakh, which was enhanced to Rs 25 lakh in May 2024, for civil central government employees. However, confusion arose regarding its applicability and who is covered under this change in rule. Note that DoPPW is the nodal department that formulates policies related to pensions and retirement benefits for central government civil employees. Per the OM, dated October 24, 2025, DoPPW has been receiving "references/ RTI applications, etc, seeking clarification" regarding the applicability of the enhanced gratuity limit. Further, various ministries and departments have also been referring cases concerning organisations that are not under the DoPPW's purview.

To Whom Does The Enhanced Gratuity Limit Apply?

Thus, to provide clarification, DoPPW issued the OM, which states that the Rs 25 lakh gratuity limit is applicable only to central government civil employees governed by:

• Central Civil Services (Pension) Rules, 2021, and

• Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

​The enhancement applies to civil employees in the central government, including those under the National Pension System (NPS) framework.

Who Are Excluded?

The clarification emphasises that the gratuity enhancement does not cover employees of societies, banks, port trusts, Reserve Bank of India (RBI), public sector undertakings (PSUs), autonomous bodies, universities, state governments, railways, defence personnel, etc.

Limit Enhancement Announced In 2024

DoPPW, through OM dated May 30, 2024, announced enhancing the maximum limit for retirement gratuity and death gratuity to implement the recommendation of the 7th Central Pay Commission (CPC). According to it, "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 per cent, i.e., from Rs 20.00 Lakh to Rs 25.00 Lakh, with effect from January 1 2024."

However, due to the confusion about the enhanced gratuity limit applicability, DoPPW's recent OM clarifies that its gratuity mandate is limited to central government civil employees covered under the specific rules, which are: Central Civil Services (Pension) Rules, 2021, and Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

Another OM issued on the same date stated that employees of railways, statutory bodies, defence personnel, autonomous bodies, and PSU/Banks are not covered under the rules notified by DoPPW.

But the excluded departments or entities are not under DoPPW's purview. As it reads, the query on how such organisations is governed must "be addressed to the concerned organisation / concerned administrative Ministry/Department". Further, it urges the ministries and departments to thoroughly check the cases internally before seeking advice from the DoPPW.