What is retirement gratuity?
Retirement gratuity is a one-time, lump-sum payment made to a Central Government employee on retirement, in addition to pension. It is governed by Rule 44 of the CCS (Pension) Rules, 2021 (corresponding to the earlier Rule 50 of the CCS Pension Rules, 1972) and is payable to employees who have completed at least 5 years of qualifying service.
How retirement gratuity is calculated
Retirement emoluments means Basic Pay plus Dearness Allowance admissible on the date of retirement. Qualifying service is counted in completed six-month periods (a period of less than six months is ignored), subject to a maximum of 66 six-month periods — equivalent to 33 years of service, and a ceiling of 16.5 times the emoluments.
| Completed qualifying service | Six-month periods | Multiple of emoluments |
|---|---|---|
| 10 years | 20 | 5.0× |
| 20 years | 40 | 10.0× |
| 30 years | 60 | 15.0× |
| 33 years or more | 66 (maximum) | 16.5× (maximum) |
The gratuity ceiling: ₹25 lakh
Regardless of how the formula calculates, retirement gratuity is subject to a maximum ceiling. Under the 7th CPC, this ceiling was raised from ₹10 lakh to ₹20 lakh effective 1 January 2016. Following the CCS (Pension) Rules provision that links gratuity ceiling to DA — under which the ceiling rises by 25% each time DA crosses a 50% multiple — the ceiling was enhanced to ₹25 lakh effective 1 January 2024, when DA crossed 50%. This ₹25 lakh figure is the default used in this calculator.
Worked example
Emoluments = ₹1,23,100 × 1.60 = ₹1,96,960
Completed six-month periods = 60 (30 years) + 0 (4 months is less than 6, not counted)
Gratuity = ₹1,96,960 × 60 ÷ 4 = ₹29,54,400 → capped at ₹25,00,000
Death gratuity — a related, separate scheme
If a Government employee dies while in service, death gratuity is payable to the family, calculated on a different, more generous scale based on length of service (ranging from 2 times emoluments for under 1 year of service, up to 12 times emoluments for 20+ years, subject to the same ₹25 lakh ceiling) — and unlike retirement gratuity, there is no minimum service requirement for death gratuity. This calculator estimates retirement gratuity only; death gratuity uses a different table.
Tax treatment
Retirement gratuity received by a Government employee is fully exempt from income tax under Section 10(10)(i) of the Income Tax Act, 1961, with no monetary ceiling — unlike gratuity received under the Payment of Gratuity Act (private sector), which is capped.