Clarification Issued on Limitation of Gratuity Amount Under NPS for Re-employed Government Servants

The Department of Pension & Pensioners’ Welfare (DoPPW) has issued a clarificatory Office Memorandum (OM) regarding the limitation on the amount of gratuity payable to Central Government employees covered under the National Pension System (NPS), particularly in cases involving re-employment after military service or service in autonomous bodies and PSUs.

The clarification, issued on 26 December 2025, addresses long-standing queries raised by various Ministries and Departments on whether gratuity drawn for earlier military service should be counted while applying the ceiling on gratuity payable for subsequent civil government service.

OM on limitation on amount of G…

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Background: Amendment to CCS (Payment of Gratuity under NPS) Rules, 2025

The OM refers to Rule 4A introduced through the Central Civil Services (Payment of Gratuity under NPS) Amendment Rules, 2025, which provides for a limitation on the maximum admissible gratuity in cases where an employee has rendered service in more than one organisation before final retirement.

These provisions are particularly relevant for:

• Government servants covered under NPS
• Employees who have rendered service in:
  • Central Government
  • State Government
  • Autonomous Bodies
  • Public Sector Undertakings (PSUs)
  • Military service followed by civil service

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Key Provision: No Separate Gratuity for Re-employment After Retirement

As per Rule 4A, the OM reiterates that:

• A Government servant who has:
  • Retired on superannuation, retiring or compulsory retirement gratuity, or
  • Received compassionate gratuity after dismissal/removal,
• And is subsequently re-employed,

👉 shall not be entitled to a separate gratuity for the period of re-employment.

This ensures that gratuity is not paid multiple times for overlapping or successive spells of service after retirement.

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Exception: Service in PSU/Autonomous Body Before Joining Government

The OM, however, makes an important distinction for employees who:

• Were initially appointed in a PSU or autonomous body, and
• Were later appointed to Central Government service with proper permission of the earlier organisation.

In such cases:

• The employee is eligible for gratuity for:
  • Service rendered in the Government, in addition to
  • Gratuity already received from the PSU or autonomous body.

But with a crucial limitation:

The total gratuity for all services combined shall not exceed the amount that would have been admissible had the entire service been rendered under the Government, based on the emoluments at the time of retirement from Government service.

This provision ensures equity while preventing excess gratuity beyond the statutory ceiling.

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Separate Clarification for State Government + Central Government Service

The DoPPW also refers to its earlier OM No. 7/5/2012-P&PW(B) dated 12.02.2020, which laid down instructions for counting past service for gratuity purposes under NPS.

As per these instructions:

• If an employee has rendered service under:
  • State Government, and later under
  • Central Government,

And has drawn separate gratuity for both services:

👉 The combined gratuity amount shall not exceed what would have been admissible had the employee continued in Government service and retired on the same pay last drawn.

This principle mirrors the limitation applied to PSU/autonomous body cases.

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Major Clarification: Military Service Gratuity Not to Be Counted

One of the most significant clarifications in the OM relates to employees re-employed in civil service after military service.

The Department has clearly clarified that:

• Gratuity drawn for military service shall NOT be counted while applying the limitation on gratuity payable for:
  • Subsequent civil service, either under:
    • CCS (Pension) Rules, 2021, or
    • CCS (Payment of Gratuity under NPS) Rules, 2021.

In other words:

There will be no ceiling linkage between gratuity drawn for military service and gratuity payable for later civil government service.

This clarification removes ambiguity and is likely to benefit a large number of ex-servicemen re-employed in civil posts.

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Issued in Consultation With Department of Expenditure

The OM states that this clarification has been issued:

• In consultation with the Ministry of Finance, Department of Expenditure
• Based on Note No. 1(8)/E/V/2025 dated 11.11.2025

Additionally, for employees of the Indian Audit and Accounts Department, the instructions have been issued in consultation with the Comptroller and Auditor General of India, as required under Article 148(5) of the Constitution.

View OM: