In July 2021, Prime Minister Narendra Modi led government at the Centre decided to hike Dearness Allowance (DA) and Dearness Relief (DR) paid to government employees and pensioners respectively to 28% from 17%. The new increased DA and DR came into effect from July 1. It is to be noted that the DA hike was frozen in 2020 for the period January 2020 to June 2021 because of COVID-19 outbreak.
The DA hike, however, was not given retrospectively and that’s why the central government employees who retired between January 2020 to June 2021 were confused over the DA rate that will be applicable for the calculation of their gratuity, leave encashment and other retirement benefits.
In order to end the confusion, the Union Finance Ministry recently issued details related to the the calculation of gratuity and leave encashment for the central government employees, who retired between January 2020 to June 2021. The government has also notified the amount of DA that the Centre will consider for calculation of gratuity and leave encashment.
“Department of Expenditure has issued O.M. dated 07.09.2021 regarding calculation of Gratuity and Leave Encashment for Central Govt. employees, who retired during the period from January 2020 to June 2021,” Department of Pension & Pensioners’ Welfare tweeted.
The breakup of the additional 11% DA that was announced in July is 4% for January 2020 to June 30 2020, 4% for July to December 31, 2020 and 3% for January to June 30, 2021.
As per the Office Memorandum (OM) issued by the Department of Expenditure, the retirement benefits of these employees will be calculated as follows:
As per the rules mentioned in the Central Civil Services (Pension) Rules, 1972, the DA on the date of retirement or death of the employee is reckoned as emoluments for the purpose of calculation of gratuity.
– Based on the rules, the national percentage of DA for the calculation of gratuity and leave encashment has been announced.
– For employees retired during January 1, 2020, to June 30, 2020, the applicable DA rate is 21% – 17% plus 4% for the period January 1, 2020 to June 30, 2020.
For employees retired during July 1, 2020, to December 31, 2020, the applicable DA rate is 24%– 17% plus 4% for the period January 1, 2020 to June 30, 2020 and 4% for July 1 to December 31, 2020.
– For employees retired during January 1, 2021, to June 30, 2021, the applicable DA rate is 28%– 17% plus 4% for the period January 1, 2020 to June 30, 2020, 4% for July 1 to December 31, 2020 and 3% for January 1 to June 30 2021.