NPS Gratuity Rules: A very important piece of news has emerged for central government employees and pensioners. The Department of Pension and Pensioners' Welfare (DoPPW) has completely clarified the rules regarding gratuity. In a recent office memorandum issued on December 26, 2025, the government has clarified the circumstances under which employees will be entitled to gratuity and when they will not receive it. This decision is particularly significant for those who are re-employed after retirement or who have joined the civil service after retiring from the armed forces.

What is the catch with the ‘One-Time Terminal Benefit’?
The point the government has emphasized most in its order is the nature of gratuity. According to the DoPPW, for employees covered under the NPS, gratuity will now be considered a “one-time terminal benefit,” meaning a benefit received only once upon termination of service. In simple terms, gratuity is the amount given to an employee as a farewell payment for their service.

The department states that if an employee has already received gratuity upon retirement, compulsory retirement, or leaving service for any other reason, they will not be given gratuity a second time upon rejoining service. The government's argument is clear: the same person cannot be given this benefit repeatedly for different periods of service, as it is a final benefit.

What will be the impact on those re-employed after retirement?
This rule might be a bit complicated for those who rejoin a government department after completing their first job. According to the new rules, if a person has already received gratuity during their previous military or civil service, they cannot claim gratuity again after re-employment. It is often observed that many soldiers join the civil services after retiring from the army. Until now, there was considerable confusion regarding this, which the government has clarified through this memorandum.

Good news for these employees!
However, the government has also given concessions in some special cases. If an employee was previously working in a Public Sector Undertaking (PSU) or an autonomous body and joins the central government service after receiving gratuity from their previous employer with due approval, the rules are slightly different for them. Such an employee may receive separate gratuity for their central government service.

But there's a catch here, too. The government has clarified that the total amount of gratuity from both places should not exceed the amount an employee would receive for serving the central government for the entire duration of their service. This means you can benefit from both places, but there is a maximum limit.

Gratuity Calculation
The Pension Department has also clarified the situation for employees who move from state government to central government service. For example, if an employee has previously worked under a state government and received gratuity there, and later joins the central government service and wants gratuity here as well, they will receive this benefit. The rule is that the previous service and the current service will be combined, but the total gratuity should not exceed the maximum limit set by the government.

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