The Central Government has issued an important clarification on gratuity rules for employees covered under the National Pension System (NPS).
This update explains when gratuity limits apply and when employees can receive full benefits without any reduction.
The clarification has been shared through an Office Memorandum (OM) by the Department of Pension and Pensioners’ Welfare, under the Ministry of Personnel, Public Grievances and Pensions.
Contents
What Rule 4A Says About Gratuity Limits
Under Rule 4A of the CCS (Payment of Gratuity under NPS) Amendment Rules, 2025, a gratuity limit applies only in specific situations.
If a government employee has served both in Central Government service and in a PSU or autonomous body, and receives gratuity separately from both, then a combined gratuity limit will apply.
This limit is calculated based on the total length of service and the last drawn salary at the time of retirement from Central Government service.
Gratuity Rules in Case of Re-employment
If an employee retires and later gets re-employed in government service, the rules are clear.
Employees who have already received gratuity on superannuation, compulsory retirement, or compassionate grounds will not get a separate gratuity for the re-employment period.
The government has clarified that re-employment does not create fresh eligibility for gratuity.
Moving from PSU or Autonomous Body to Government Service
Employees who join Central Government service after working in a PSU or autonomous body, with proper permission, will receive gratuity from both services.
However, the total gratuity amount cannot exceed what would be payable if the employee had completed the entire service under the Central Government and retired at the same final salary.
Rule for State and Central Government Service
If an employee has worked first under a State Government and later under the Central Government, and has received gratuity for both services, a limit will still apply.
In such cases, the combined gratuity cannot exceed the amount that would have been payable if the employee had served continuously under the Central Government.
Big Relief for Ex-Servicemen Joining Civil Service
The most important clarification in this OM is for employees who served in the military and later joined civil service.
The government has clearly stated that military service gratuity will not affect civil service gratuity.
If an employee has already received gratuity for military service, their civil service gratuity under NPS or CCS rules will not be reduced or capped because of it.
This decision provides major relief to ex-servicemen and removes long-standing confusion.
Why This Clarification Matters
This Office Memorandum simplifies gratuity rules for NPS employees and removes ambiguity across different service combinations.
It clearly defines limits for PSU, State Government, and Central Government services, while giving full protection to civil service gratuity after military service.
For employees and pensioners, this brings greater transparency and confidence in retirement benefits.