7th Pay Commission: Due to the suspension of the DA rise, the gratuity maximum has been raised to Rs 25 lakh. This is what EPFO states

The Employees’ Provident Fund Organization (EPFO) has opted to “abeyance” the increase in retirement and death gratuity for workers, which is a blow to those employed by the government and organized sector.

Recall that last month, the EPFO raised the maximum retirement and death gratuity limits from Rs. 20 lakh to Rs. 25 lakh, a 25% increase. The increase in gratuity was caused by the change in dearness allowance that central government workers are entitled to, which will now be 50% of their base salary beginning of January 1, 2024.

One week later, on May 7, the retirement fund organization released another circular declaring that the rise in gratuity due to the DA increase had been placed on hold effective immediately. The decision’s justifications were not stated in the order.

Additional Central PF commissioner S K Suman has signed this circular. It states, “With immediate effect, the circular number HRD-1/8/2024/Misc-Circulars-Part(1)/1004 dated 30.4.2024 is kept in abeyance.”

It is significant to remember that, as of January 1st of this year, the federal government increased the deferred income (DA) for around 50 lakh workers and over 67 lakh pensioners from 46% to 50% in March.

All other connected payments, including the children’s education allowance (CEA), gratuity, HRA, and hostel subsidy, automatically rose when the DA was raised to 50%.

To allay any questions over this rise in allowance rates, the Ministry of Personnel, Public Grievances and Pension Department of Personnel and Training has released a statement in response to many inquiries from different sources.

In an office memo dated April 25, the department stated, “References are being received from various quarters regarding the amount of children education allowance and hostel subsidy admissible consequent upon enhancement of dearness allowance payable to central government employees @ 50% w.e.f. 1st January, 2024.”

The DoPT clarified the regulation by stating that the housing subsidy and children’s education allowance caps “would be automatically raised by 25% every time the dearness allowance on the revised pay structure goes up by 50%.”

The guidelines provide that when the DA reaches a 50% ceiling, the gratuity limit and other allowances are immediately adjusted. Since the DA has increased to 50%, there was also conjecture that it might be combined with Basic Pay after this revision. For the time being, however, the administration has rejected any such idea.

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