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    7th Pay Commission: Central govt employees to get up to Rs 7 lakh higher gratuity



     7th Pay Commission: Central govt employees to get up to Rs 7 lakh higher gratuity


    New Delhi: The Central Government recently revised the percentage of Dearness Allowance (DA) to be considered for calculation of Gratuity and Leave Encashment of Central Government Employees who retired between 1st January 2020 and 30th July 2021.

    The breakup of the additional 11% DA that was announced in July is 4% for January 2020 to June 30 2020, 4% for July to December 31, 2020 and 3% for January to June 30, 2021. As per the rules mentioned in the Central Civil Services (Pension) Rules, 1972, the DA on the date of retirement or death of the employee is reckoned as emoluments for the purpose of calculation of gratuity. 


    Based on the rules, the national percentage of DA for the calculation of gratuity and leave encashment has been announced. As per the Office Memorandum (OM) issued by the Department of Expenditure, retirement benefits of these employees will be calculated as follows:


    For employees retired during January 1, 2020, to June 30, 2020, the applicable DA rate is 21%-- 17% plus 4% for the period January 1, 2020 to June 30, 2020.


    For employees retired during July 1, 2020, to December 31, 2020, the applicable DA rate is 24%-- 17% plus 4% for the period January 1, 2020 to June 30, 2020 and 4% for July 1 to December 31, 2020.


    For employees retired during January 1, 2021, to June 30, 2021, the applicable DA rate is 28%-- 17% plus 4% for the period January 1, 2020 to June 30, 2020, 4% for July 1 to December 31, 2020 and 3% for January 1 to June 30 2021.




    Up to Rs 7 lakh increase in Gratuity:

    HS Tiwari, Former President of AG Office Brotherhood, Prayagraj, which calculates DA, was quoted in a Jagran report saying that if the basic salary of an employee is Rs 40,000 rupees at the time of retirement, then they will be benefited hugely from the 11 per cent increase in dearness allowance (DA). The amount of their gratuity and Leave Encashment will increase by about Rs 1,17,000. On the other hand, if the basic pay is Rs 2,50,000 per month, the retirement fund will increase by more than Rs 7 lakh.




    28% dearness allowance (DA) payment:

    As per Tiwari, employees who have retired between January 1, 2021 and June 30, 2021, will benefit greatly. Because the calculation of their retirement fund will be based on 28 per cent dearness allowance. Those who have retired in July-December 2020 period, will get lesser benefit, as the DA was 24 percent during that time. Those retiring in January-June 2020 will get the least benefit because of 21 per cent DA rate.




    For people retiring in 1st January 2020-30 June 2021:

    If Basic Salary = Rs 40,000 per month

    11% DA Hike in one and a half year = Rs 4,400 per month

    Basic + DA = Rs 44,400 per month

    Benefit in Gratuity + Leave Encashment = Around Rs 1,16,600

    it is worth noting that as per current provisions, gratuity payment is effective after completion of five years of service. This is expected to change under the new labour code wherein an employee will be eligible for gratuity payment even after completion of 1 year of service. 

    However, implementation of the same has been postponed till 1 October and is expected to be delayed until the beginning of the next financial year. The detailed guidelines and processes for the same are also expected to be revised.

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