Big Relief for Government Employees? Gratuity Limit May Rise to Rs 75 Lakh Under 8th Pay Commission

New Delhi: Central employees and pensioners' organizations have demanded major changes in the gratuity rules before the 8th Pay Commission. The most prominent demand among these is to increase the existing gratuity limit of Rs 25 lakh to Rs 75 lakh. Along with this, changes have also been proposed in the method of calculating death gratuity and gratuity.

What are the current rules?

The central government had increased the maximum limit of retirement and death gratuity from Rs 20 lakh to Rs 25 lakh as of January 1, 2024. This hike was implemented after the recommendations of the 7th Pay Commission and Dearness Allowance (DA) crossing 50%.

What are the main demands of the employees?

The National Council-Joint Consultative Machinery (NC-JCM) in its memorandum submitted to the 8th Pay Commission has demanded an increase in the maximum limit of gratuity to ₹75 lakh. The organization says that the current limit is not sufficient in view of rising inflation and salary structure.

Apart from this, there is also a proposal to change the formula for calculating gratuity. Currently, gratuity is calculated on the basis of one quarter month's salary, while employee organizations are demanding to make it more beneficial.

What changes are sought in death benefits?

Pensioners and employee organizations have also demanded to make the death gratuity more liberal. They argue that the financial assistance given to the family in case of death of an employee during service should be increased in accordance with the current circumstances. Some organizations have also called for parity between different pension systems and periodic review of death benefits.

Has any decision been taken yet?

At present all these demands and suggestions are proposals placed before the 8th Pay Commission. The Commission will consider these and submit its recommendations to the government. The final decision will be taken by the central government only after considering the report of the commission.

What does this mean for employees?

If proposals like increasing the gratuity limit and changing the calculation formula are accepted, retiring employees and their families may get much more financial benefits than the current system. However, at present only a maximum limit of Rs 25 lakh is applicable and any change will require government approval.