Gratuity Benefits under NPS – National Pension System | Gratuity Benefits under NPS

Gratuity Benefits under NPS | National Pension System

Gratuity Benefits are an essential component of the National Pension System (NPS), which provides retirement benefits to employees in India. Under the NPS, employees receive a lump sum amount upon retirement, which includes contributions made by the employer and the employee over the years, as well as any interest earned on those contributions. This lump sum amount can then be used to purchase an annuity, which provides a regular income stream in retirement. The gratuity benefits under the NPS help to ensure financial security for employees in their golden years, making it an attractive retirement scheme for many.

Press Information Bureau
Government of India
Ministry of Finance

03-May-2013 16:54 IST

Gratuity Pay under New Pension System

Death-cum-Retirement Gratuity is paid to Central Government employees under New Pension System (NPS) as it is paid under the old pension scheme. The monthly annuity under the New Pension System (NPS) is only a replacement of pension on retirement and family pension of death after retirement.

The benefits of Death cum Retirement Gratuity (DCRG) and pension/family pension have been provisionally allowed, vide the Office Memorandum of Department of Pension and Pensioners’ Welfare No. 38/41/06-P & PW(A) dated 5.5.2009 in respect of Central Government servants covered under NPS in cases where a Government Servant is retired on invalidation/disability and in the case of death of a Government servant in service on the same rates as are applicable under the old pension scheme Central Civil Service (Pension) Rules, 1972.

The retirement gratuity is payable to the retiring Government servant. A minimum of 5 years’ qualifying service and eligibility to receive service gratuity/pension is essential to get this one time lump sum benefit. Retirement gratuity is calculated @ 1/4th of a month’s Basic Pay plus Dearness Allowance drawn before retirement for each completed six monthly period of qualifying service.

The maximum retirement gratuity payable is 16½ times the Basic Pay, subject to a maximum of Rs. 10 lakh. If the Government Servant dies while in service, the death gratuity shall be paid to his family at rates furnished in the table below:

S. No.	Length of Qualifying Service	Rate of Death Gratuity
1.	Less than one year	2 times of emoluments
2.	One year or more but less than 5 years	6 times of emoluments
3.	5 years or more but less than 20 years	12 times of emoluments
4.	20 years or more	Half of emoluments for every completed six monthly period of qualifying service subject to a maximum of 33 times of emoluments.

Maximum amount of Death Gratuity admissible is Rs, 10 lakh with effect from 1.1.2006.

This was stated by Minister of State for Finance, Shri Namo Narain Meena, in written reply to a question in the Lok Sabha today.

Source: PIB News

Can an employee receive both Pension and Gratuity benefits under NPS?

Yes, an employee can receive both the pension amount and gratuity amount under the National Pension System (NPS) based on their eligibility criteria and length of qualifying service.

Are there any tax implications on the Gratuity amount received under NPS?

As per the Income Tax Act, the gratuity amount received by an employee is exempt from tax up to a certain limit. Any amount exceeding this limit may be subject to tax.

How is the Gratuity Benefit paid to the employee?

The Gratuity Benefit is paid as a lump sum to the employee upon leaving the service. The employer is responsible for making this payment.

Is Gratuity available for employees with less than one year of qualifying service?

Yes, employees who have completed less than one year of qualifying service are eligible for a gratuity payment of 2 times their emoluments.

Is there any maximum limit on the Gratuity amount?

Yes, for employees who have completed 20 years or more of qualifying service, the gratuity amount is capped at a maximum of 33 times of emoluments.

What are emoluments?

Emoluments refer to the basic salary plus dearness allowance.

How is the Gratuity amount calculated under NPS?

The rate of Death Gratuity under NPS varies based on the length of qualifying service. Here are the rates:

Less than one year: 2 times of emoluments
One year or more but less than 5 years: 6 times of emoluments
5 years or more but less than 20 years: 12 times of emoluments
20 years or more: Half of emoluments for every completed six monthly period of qualifying service subject to a maximum of 33 times of emoluments.

What is the Gratuity Benefit under NPS?

Gratuity Benefit is a lump sum amount paid by the employer to an employee when they leave the service after completing a certain length of qualifying service.