As of January 31, 2026, the Department of Public Enterprises (DPE) has issued consolidated guidelines regarding the payment of Gratuity to employees of Central Public Sector Enterprises (CPSEs). These guidelines clarify the calculation method, eligibility criteria, and the applicability of the Payment of Gratuity Act, 1972, for executives and non-unionized supervisors.
Fact Check: CPSE Gratuity Limit ₹25 Lakh?
There is confusion regarding the Gratuity ceiling for CPSE employees. While Central Government employees saw a hike to ₹25 Lakh (due to DA crossing 50%), the rule for CPSEs depends on the specific adoption of DPE guidelines by their respective boards.
⚠️ Clarification: The statutory limit under the Payment of Gratuity Act remains ₹20 Lakh (effective from 29.03.2018). Any enhancement to ₹25 Lakh requires a specific order from the administrative ministry or the CPSE board based on affordability.
Employees should check their company’s specific circular. For related PSU wage news, refer to the Latest Psgic Nabard Wage Revision 2026 Arrears Pension rules.
DPE Consolidated Guidelines 2026: Key Provisions
The consolidated guidelines reiterate the financial principles for paying Gratuity. This compilation helps CPSEs streamline settlements for retiring employees.
- Eligibility: Minimum 5 years of continuous service is mandatory for Gratuity payment (except in cases of death or disablement).
- Calculation Formula: (Last Drawn Basic Pay + DA) × 15/26 × Number of Years of Service.
- Income Tax: Gratuity received by CPSE employees is tax-exempt up to the statutory limit (currently ₹20 Lakh).
- Deductions: DPE allows recovery of dues (like HBA or license fees) from Gratuity, subject to specific conditions.
The “15/26” rule means employees get wages for 15 days for every completed year of service, calculated on a 26-day working month basis. This aligns with the Latest Expected Da January 2026 Aicpin Update Jan 31 data for DA calculation components.
Affordability Clause for CPSEs
Unlike Central Government departments, CPSEs must adhere to “Affordability” clauses for pay revision benefits. The payment of enhanced Gratuity or Performance Related Pay (PRP) is often linked to the Profit Before Tax (PBT) of the enterprise.
Unions have raised concerns about this disparity. The Latest Confederation Strike Notice Feb 12 2026 8th Cpc highlights the demand to remove such conditionalities for PSU staff.
| Parameter | Central Govt Employee | CPSE Employee |
|---|---|---|
| Governing Rule | CCS (Pension) Rules, 2021 | Payment of Gratuity Act, 1972 |
| Current Ceiling | ₹25 Lakh (DA linked) | ₹20 Lakh (Subject to Board) |
| Calculation | Based on Qualifying Service | 15 days per year of service |
📄 OFFICIAL DOCUMENT REFERENCE
- 📂 Department: Department of Public Enterprises (DPE)
- 📅 Status: Consolidated Guidelines Issued
- 📌 Subject: Payment of Gratuity to CPSE Employees
Is the CPSE Gratuity limit increased to ₹25 Lakh?
Not automatically. While the limit for Central Govt staff is ₹25 Lakh, CPSEs follow the Payment of Gratuity Act (₹20 Lakh) unless the board approves the enhancement based on affordability.
How is Gratuity calculated for CPSE employees?
The formula is: (Basic Pay + Dearness Allowance) × 15/26 × Completed Years of Service.
Is 5 years service mandatory for Gratuity?
Yes, a minimum of 5 years of continuous service is required, except in cases where employment is terminated due to death or disablement.
🇮🇳 हिंदी में संक्षेप
लोक उद्यम विभाग (DPE) ने CPSE कर्मचारियों के लिए ग्रेच्युटी भुगतान पर समेकित दिशानिर्देश जारी किए हैं। वर्तमान में ग्रेच्युटी की सीमा 20 लाख रुपये है। 25 लाख रुपये की सीमा का लाभ तभी मिलेगा जब CPSE बोर्ड इसकी मंजूरी देगा। ग्रेच्युटी का फॉर्मूला (Basic + DA) × 15/26 × सेवा वर्ष है। 5 साल की सेवा अनिवार्य है।
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Disclaimer: This article provides an overview of DPE guidelines. Please verify with your specific CPSE HR department for company-level adoption of rules.
