7th pay commission report on Retirement Gratuity

7th Pay Commission recommends for increasing Retirement Gratuity Ceiling limit from Rs.10 lakhs to Rs.20 lakhs from 1.1.2016

After implementation of 6th Pay commission recommendations, retirement gratuity is calculated @ 1/4th of a months Basic Pay plus Dearness Allowance drawn before retirement for each completed six monthly period of qualifying service. There is no minimum limit for the amount of gratuity. Maximum retirement gratuity payable is 16 times the Basic Pay, subject to a maximum of Rs. 10 lakhs.

The Commission recommends enhancement in the ceiling of Retirement gratuity from the existing 10 lakh to 20 lakh from 01.01.2016.

A number of representations have been received by the Commission stating that there is a need to revise the existing ceiling of ₹10.00 lakh with regard to payment of service gratuity.

Analysis and Recommendations :

Rule 49 and 50 of the CCS (Pension) Rules provides that a government servant is entitled to get retirement gratuity equal to one-fourth of his emoluments for each completed six monthly period of qualifying service subject to a maximum of 16.5 times of the last emoluments subject to a maximum of ₹10 lakh.

The Commission sought the views of the government in this regard. The Department of Pension and Pensioners Welfare stated that the VI CPC has increased the amount of gratuity from 3.5 lakh to 10 lakh w.e.f. 01.01.2006. This amount, in the view of the department, is not commensurate with emoluments that are available to senior officers at the time of retirement. The department has suggested to the Commission that a view could be taken to index gratuity with amount of DA admissible at the time of retirement.

The Commission notes that there is merit in the argument advanced to index the ceiling on gratuity so that the benefits of the enhanced ceiling are available to personnel in a manner which is more even over a time frame.

The Commission recommends enhancement in the ceiling of gratuity from the existing 10 lakh to 20 lakh from 01.01.2016. The Commission further recommends, as has been done in the case of allowances that are partially indexed to Dearness Allowance, the ceiling on gratuity may increase by 25 percent whenever DA rises by 50 percent.

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