EPFO: Increase in gratuity on account of hike in DA put in abeyance with immediate effect

The Employees Provident Fund Organisation (EPFO) has announced to put the enhancement of gratuity on account of increase in dearness allowance (DA) in abeyance with immediate effect.

The circular, signed by SK Suman, additional Central PF commissioner, reads: “The circular number HRD-1/8/2024/Misc-Circulars-Part(1)/1004 dated 30.4.2024 is kept in abeyance with immediate effect.”

The EPFO released the circular on Tuesday.

“By way of Circular dated May 7, earlier circular dated April 30, has been kept in abeyance. The possible ramification of the Circular dated May 7 is that once the earlier circular is reinstated, 1) The beneficiaries will be entitled to benefits from Jan 1 itself, or 2) from another/later date, if the effective date of Jan 1 is modified,” says Manmeet Kaur, Partner, Karanjawala & Co.

It is vital to recall here that the Union Cabinet had approved releasing additional dearness allowance (DA) and dearness relief (DR) to central government employees and pensioners effective January 1. The DA has been raised from 46 percent to 50 percent of the basic pay or pension.

As DA hikes, all other related allowances such as house rent allowance (HRA), gratuity ceiling and hostel subsidy are also set to increase. This happens because these allowances are linked to the DA and as the DA rises, they rise too.

After DA was hiked to 50 percent, the gratuity ceiling was also raised from ₹20 lakh to ₹25 lakh.

The decision of raising the DA and DR was taken in the run up to general elections and was aimed to soften the impact of inflation on government employees and pensioners. 

This is set to benefit nearly 4.9 million government employees and 6.79 million pensioners, costing the exchequer total of around ₹12,868.72 crore. 

The increase was in accordance with an accepted formula based on the recommendations of the seventh Central pay commission, a government had stated.

ALSO READ: DA hiked to 50%: Will it lead to higher basic salary for central government employees? Key questions answered

Matters regarding NPS

In another news, EPFO also released a circular announcing a new email ID with regards to NPS related matters. The new email id is epfohq.nps@epfindia.gov.in. This was announced in a circular released on May 3, 2024.

The circular also says that any references of NPS related matters pertaining to head office will now be forwarded to the said email ID.

In fact, the pension fund body also highlighted that pending references sent earlier are required to be forwarded to the new email ID.