Dearness allowance at 50%: Maximum gratuity limit increased 25% by Dept. of Ex-Servicemen Welfare

The Department of Ex-Servicemen Welfare (DESU) under the Ministry of Defence recently increased the maximum gratuity limit to ₹25 lakh for Commissioned Officers, Junior Commissioned Officers, and other ranks in the Indian Army, Navy, and Air Force.

The hike in the gratuity limit has been implemented with effect from January 1, 2024. And it will be applicable for eligible personnel retiring or dying in harness on or after January 1, 2016.

"In terms of Para 7.1 of the aforesaid Ministry's letter the maximum limit of all kinds of Gratuity i.e. Retiring/ Retirement/ Service/ Invalid/ Special/ Terminal/Death Gratuity shall be ₹20 lakhs. This ceiling on gratuity shall be increased by 25% whenever the Dearness Allowance rises by 50% of the basic pay," DESW said in an order dated May 14, 2025.

The order was signed by Gopal Singh, Under Secretary to the Government of India, and sent to the Chief of the Defence Staff, the Chief of the Army Staff, the Chief of the Naval Staff, and the Chief of the Air Staff.

It further said that the Department of Expenditure vide their OM No. 1/1/2024-E-II(B) dated 12.03.2024 has issued instructions regarding enhancement of Dearness Allowance from 46% to 50% of the Basic Pay with effect from January 1, 2024.

"Accordingly, as per the Government's decisions in implementation of the recommendation of the Seventh CPC, the maximum limit of all kinds of gratuity is increased by 25% i.e from ₹20.00 Lakh to ₹25.00 Lakh, with effect from 01.01.2024," DESW said.