A central government employee gets gratuity as a lump sum on retirement. If the employee dies in service, the family gets death gratuity instead. Neither amount comes from a percentage of CTC or from the 15/26 formula used in private jobs. The amount depends on three things: your last basic pay, the dearness allowance (DA) on your date of retirement, and the length of your qualifying service. This post takes the rule from the Gazette, shows how the service is counted, works the numbers for Levels 6, 10 and 13, and shows what the July 2026 DA order adds for anyone retiring from 1 July 2026.
Which rule applies to you
Two sets of rules apply, depending on when you joined. Their gratuity formula and death gratuity table are the same.
- Joined on or before 31 December 2003 (old pension scheme): rule 45 of the Central Civil Services (Pension) Rules, 2021, notified on 20 December 2021 (G.S.R. 868(E)).
- Joined on or after 1 January 2004 (NPS): rule 22 of the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, notified on 23 September 2021 (G.S.R. 658(E)).
- Railway employees are outside the CCS (Pension) Rules, 2021 (rule 2(a)), and armed forces personnel have their own pension regulations. Both are out of scope here.
The retirement gratuity formula
Rule 45(1)(a) of the CCS (Pension) Rules, 2021 sets the formula. Rule 22(1) of the NPS gratuity rules uses the same words for the amount. In steps:
- Eligibility: at least five years of qualifying service. Service of four years and nine months or more counts as five years (rule 45(5)).
- Emoluments = last basic pay + the DA admissible on the date of retirement. Rule 31 defines emoluments as basic pay, and the second proviso to rule 45(6) adds the DA for gratuity.
- Retirement gratuity = ¼ × emoluments × number of completed six-monthly periods of qualifying service.
- Maximum: 16½ times the emoluments. That is 66 six-monthly periods, or 33 years. Service beyond 33 years adds nothing.
- Ceiling: ₹25 lakh from 1 January 2024 (see the next section).
- If the final amount has paise in it, it is rounded up to the next rupee.
One more proviso in rule 45(6) can matter: if your emoluments were reduced during your last ten months of service, the average emoluments under rule 32 are used instead.
Counting the six-monthly periods
Rule 45(4) says a fraction of a year of three months or more counts as a completed six-monthly period. The forms in the same rules put it the same way: a period of three months and above is treated as a completed six-monthly period. So the leftover months after the last full half-year decide whether you get one more period.
- 30 years exactly: 60 periods, so ¼ × 60 = 15 times the emoluments.
- 32 years 4 months: 64 full periods with 4 months left over. 4 is three or more, so 65 periods.
- 32 years 8 months: 65 full periods with 2 months left over. 2 is less than three, so it stays 65.
- 32 years 9 months: 65 full periods with 3 months left over, so 66 periods, which is the maximum.
Qualifying service is not always the same as the years since you joined. Some breaks and some kinds of leave are excluded under the rules. Your service book and the verification done five years before retirement show the figure your pension office will use.
The ₹25 lakh ceiling and where it cuts in
The Gazette text of rule 45 still says the gratuity shall not exceed twenty lakh rupees. The Department of Pension and Pensioners' Welfare (DoPPW) raised this to ₹25 lakh by its OM No. 28/03/2024-P&PW (B)/Gratuity/9559 dated 30 May 2024, effective from 1 January 2024. It did this under both the CCS (Pension) Rules, 2021 and the NPS gratuity rules. The government had accepted the 7th Pay Commission's view that the ceiling would rise by 25% once DA reached 50%, and DA reached 50% from 1 January 2024.
At the full 33 years and 63% DA, the formula reaches ₹25 lakh when emoluments reach 25,00,000 ÷ 16.5 = about ₹1,51,515. Emoluments are 1.63 times basic at 63% DA, so the basic pay at which the ceiling starts to bite is 1,51,515 ÷ 1.63 = about ₹92,954. With 30 years (15 times), the same sum gives 25,00,000 ÷ 15 ÷ 1.63 = about ₹1,02,249.
Worked example: Level 6, 33 years, retiring at 63% DA
Take a Level 6 employee whose last basic pay is ₹62,200. That is a cell in the Level 6 row of the 7th CPC pay matrix (the row starts at ₹35,400). The employee has 33 years of qualifying service and retires after 1 July 2026.
- DA at 63%: 62,200 × 63% = ₹39,186
- Emoluments: 62,200 + 39,186 = ₹1,01,386
- Six-monthly periods: 33 × 2 = 66, the maximum
- Gratuity: ¼ × 1,01,386 × 66 = 1,01,386 × 16.5 = ₹16,72,869
- Ceiling check: ₹16,72,869 is below ₹25 lakh, so the full amount is paid
Levels 6, 10 and 13 at 30 and 33 years
The table uses one last basic pay for each level, each taken from that level's row of the pay matrix. Your own last basic will differ, but the method is the same: basic × 1.63, then × 15 for 30 years or × 16.5 for 33 years, then cap at ₹25 lakh.
Our calculation under rule 45(1)(a): emoluments = basic + 63% DA; gratuity = emoluments × periods ÷ 4. Level 13 at 30 years is also capped at ₹25,00,000. Basic pay cells from the 7th CPC pay matrix (CCS (Revised Pay) Rules, 2016, Gazette 25 July 2016).
Level 6 (₹62,200)
- Emoluments at 63% DA
- ₹1,01,386
- 30 years (× 15)
- ₹15,20,790
- 33 years (× 16.5)
- ₹16,72,869
- Paid at 33 years
- ₹16,72,869
Level 10 (₹87,400)
- Emoluments at 63% DA
- ₹1,42,462
- 30 years (× 15)
- ₹21,36,930
- 33 years (× 16.5)
- ₹23,50,623
- Paid at 33 years
- ₹23,50,623
Level 13 (₹1,51,400)
- Emoluments at 63% DA
- ₹2,46,782
- 30 years (× 15)
- ₹37,01,730
- 33 years (× 16.5)
- ₹40,71,903
- Paid at 33 years
- ₹25,00,000 (ceiling)
| Level (last basic pay) | Emoluments at 63% DA | 30 years (× 15) | 33 years (× 16.5) | Paid at 33 years |
|---|---|---|---|---|
| Level 6 (₹62,200) | ₹1,01,386 | ₹15,20,790 | ₹16,72,869 | ₹16,72,869 |
| Level 10 (₹87,400) | ₹1,42,462 | ₹21,36,930 | ₹23,50,623 | ₹23,50,623 |
| Level 13 (₹1,51,400) | ₹2,46,782 | ₹37,01,730 | ₹40,71,903 | ₹25,00,000 (ceiling) |
Level 10 shows how close the ceiling sits. At a last basic of ₹92,700, emoluments are 92,700 × 1.63 = ₹1,51,101, and 1,51,101 × 16.5 = ₹24,93,166.50, which rounds up to ₹24,93,167. One cell higher, at ₹95,500, emoluments are ₹1,55,665 and the formula gives ₹25,68,472.50. That is above the ceiling, so ₹25,00,000 is paid.
What the July 2026 DA order changes
The Union Cabinet approved DA at 63% from 1 July 2026, up 3 points from 60%, on 28 October 2026. The Department of Expenditure issued the order on 29 October 2026 (OM No. 1/2(i)/2026-E.II(B)). Gratuity counts the DA admissible on the date of retirement, so 63% applies if you retire on or after 1 July 2026. For someone who retired on 30 June 2026, the DA on that date was 60%.
The 3 extra points raise emoluments by 3% of basic pay. At 33 years, gratuity rises by that amount × 16.5, until the ceiling stops it.
Our calculation. Level 6: 62,200 × 3% = ₹1,866 more emoluments, × 16.5 = ₹30,789. Level 10: 87,400 × 3% = ₹2,622, × 16.5 = ₹43,263. At 30 years the differences are ₹27,990 (Level 6) and ₹39,330 (Level 10).
Level 6 (₹62,200)
- Gratuity at 60% DA
- ₹16,42,080
- Gratuity at 63% DA
- ₹16,72,869
- Difference
- ₹30,789
Level 10 (₹87,400)
- Gratuity at 60% DA
- ₹23,07,360
- Gratuity at 63% DA
- ₹23,50,623
- Difference
- ₹43,263
Level 13 (₹1,51,400)
- Gratuity at 60% DA
- ₹25,00,000
- Gratuity at 63% DA
- ₹25,00,000
- Difference
- ₹0 (capped both times)
| Level (last basic pay), 33 years | Gratuity at 60% DA | Gratuity at 63% DA | Difference |
|---|---|---|---|
| Level 6 (₹62,200) | ₹16,42,080 | ₹16,72,869 | ₹30,789 |
| Level 10 (₹87,400) | ₹23,07,360 | ₹23,50,623 | ₹43,263 |
| Level 13 (₹1,51,400) | ₹25,00,000 | ₹25,00,000 | ₹0 (capped both times) |
The DA order came out on 29 October 2026, so people who retired between July and October may have had their gratuity worked out at 60%. Rule 45(6) uses the DA admissible on the date of retirement, and the order makes 63% admissible from 1 July 2026. We did not find a DoPPW order that sets out how the difference is paid for this instalment. If you retired in those months, ask your pension office or Pay and Accounts Office whether a revised gratuity will be issued.
Work out your DA arrear on your own basic: DA Arrear CalculatorDeath gratuity: the five slabs
If an employee dies in service, rule 45(1)(b) pays death gratuity to the family at a rate fixed by the length of qualifying service. There is no five-year minimum. Emoluments are worked out the same way, as basic plus the DA on the date of death, and the same ₹25 lakh ceiling applies. Rule 45(2) applies the same table to a death by suicide.
Rates from the Table under rule 45(1)(b), CCS (Pension) Rules, 2021 (the same table is in rule 22(2) of the NPS gratuity rules). Example: Level 6 last basic ₹50,500 (a Level 6 matrix cell) + 63% DA ₹31,815 = emoluments ₹82,315. Our calculation.
Less than 1 year
- Rate of death gratuity
- 2 times emoluments
- Example: emoluments ₹82,315
- ₹1,64,630
1 year or more, less than 5 years
- Rate of death gratuity
- 6 times emoluments
- Example: emoluments ₹82,315
- ₹4,93,890
5 years or more, less than 11 years
- Rate of death gratuity
- 12 times emoluments
- Example: emoluments ₹82,315
- ₹9,87,780
11 years or more, less than 20 years
- Rate of death gratuity
- 20 times emoluments
- Example: emoluments ₹82,315
- ₹16,46,300
20 years or more
- Rate of death gratuity
- ½ of emoluments for every completed six-monthly period, up to 33 times
- Example: emoluments ₹82,315
- 25 years (50 periods): 25 times = ₹20,57,875
| Qualifying service | Rate of death gratuity | Example: emoluments ₹82,315 |
|---|---|---|
| Less than 1 year | 2 times emoluments | ₹1,64,630 |
| 1 year or more, less than 5 years | 6 times emoluments | ₹4,93,890 |
| 5 years or more, less than 11 years | 12 times emoluments | ₹9,87,780 |
| 11 years or more, less than 20 years | 20 times emoluments | ₹16,46,300 |
| 20 years or more | ½ of emoluments for every completed six-monthly period, up to 33 times | 25 years (50 periods): 25 times = ₹20,57,875 |
The 33-times limit only matters with long service, and the ceiling may stop it before that. In the example above, 33 times ₹82,315 would be ₹27,16,395, so the family would get ₹25,00,000. Death gratuity goes to the nominee or nominees named in Form 3 (rule 46). Without a valid nomination, rule 47 pays it in equal shares to the spouse, sons and unmarried, widowed or divorced daughters. Only if there are none does it go, again in equal shares, to the other family members listed in rule 45, such as parents.
Rule 45(3) also gives a residuary gratuity. If a retired employee dies within five years of retirement, the family can claim the shortfall when the gratuity, the pension already received and the commuted value of pension together come to less than 12 times the emoluments.
Is gratuity taxed?
From tax year 2026-27 the Income-tax Act, 2025 applies. Section 19(1) lets you deduct certain sums from salary income, and its Table, serial number 3 (earlier section 10(10)(i)), covers death-cum-retirement gratuity. The amount you can deduct is the entire amount. Section 19(2)(g) says this means gratuity received under the Central Civil Services (Pension) Rules, 2021, or under a similar scheme for members of the civil services of the Union who are not governed by those rules. Retirement gratuity of a central government employee is therefore not taxed, whatever its size.
Private-sector employees fall under other serial numbers of the same Table. Serial number 5 (earlier section 10(10)(ii)) covers gratuity under the Payment of Gratuity Act, 1972, and serial number 6 (earlier section 10(10)(iii)) covers any other gratuity. Both have limits.
Government formula and private formula side by side
- Central government: ¼ of (basic + DA) for each six-monthly period, up to 16½ times; ₹25 lakh ceiling; deducted in full from salary income for tax.
- Private job: 15 days' wages for each completed year on a 26-day month (the 15/26 formula), with its own eligibility and tax limit.
- Both use basic + DA. Neither counts HRA, transport allowance or other allowances.
Frequently asked questions
- What is the retirement gratuity formula for central government employees?
- Retirement gratuity = ¼ × emoluments × completed six-monthly periods of qualifying service, where emoluments are the last basic pay plus the DA admissible on the date of retirement. It is capped at 16½ times the emoluments and at ₹25 lakh. The rule is 45(1)(a) of the CCS (Pension) Rules, 2021, and rule 22(1) of the NPS gratuity rules for those who joined from 2004.
- Is DA included in gratuity calculation for government employees?
- Yes. Rule 45(6) of the CCS (Pension) Rules, 2021 treats the dearness allowance admissible on the date of retirement or death as part of emoluments for gratuity. From 1 July 2026 that DA is 63% of basic pay.
- How are months of service counted for gratuity?
- Service is counted in completed six-monthly periods. A leftover fraction of three months or more counts as one more completed period (rule 45(4)). For example, 32 years 4 months counts as 65 periods.
- How much death gratuity does the family get?
- It depends on qualifying service: 2 times emoluments under 1 year, 6 times from 1 to under 5 years, 12 times from 5 to under 11 years, 20 times from 11 to under 20 years, and half of emoluments per completed six-monthly period from 20 years, up to 33 times. The ₹25 lakh ceiling applies.