NPS Gratuity Rules 2026: No Limitation For Re-Employed Ex-Servicemen
The Department of Pension and Pensioners’ Welfare (DoPPW) has clarified that ex-servicemen re-employed in central civil services under the National Pension System (NPS) will not face any ceiling on their civil service gratuity due to the gratuity already drawn for their previous military service.
Authority: DoPPW, Ministry of Personnel, Public Grievances and Pensions
Reference: OM No. 28/03/2025-P&PW(B)/10865
This article is based on the DoPPW Office Memorandum issued on December 26, 2025, in consultation with the Department of Expenditure. In practice, PAO and DDOs frequently impose statutory ceilings by erroneously clubbing past military payouts with current civil service calculations under NPS rules, causing severe financial losses during the final retirement settlement of veterans.
How does Rule 4A affect civil and military gratuity under NPS?
Rule 4A of the Central Civil Services (Payment of Gratuity under NPS) Amendment Rules 2025 imposes a maximum limitation on admissible gratuity if an employee avails separate gratuity from previous PSU or Autonomous body service. However, the government has explicitly exempted military service from this limitation.
Gratuity Limitation Scenarios: PSU vs Military Service
The exact financial protection granted to ex-servicemen becomes clear when contrasted against civilian re-employment scenarios. The table below illustrates how the limitation rule is applied across different categories of re-employed government servants.
| Previous Service Category | Current Service Rules | Gratuity Limitation Applied? |
|---|---|---|
| Military Service (Armed Forces) | Civil Service (NPS Gratuity Rules 2021) | No Limitation (Calculated Independently) |
| Public Sector Undertaking (PSU) | Civil Service (NPS Gratuity Rules 2021) | Yes (Combined payout restricted to maximum limit) |
| Autonomous Body | Civil Service (NPS Gratuity Rules 2021) | Yes (Combined payout restricted to maximum limit) |
Are IA&AD personnel covered under this exemption?
Yes. For personnel serving in the Indian Audit and Accounts Department (IA&AD), the DoPPW issued this specific clarification in direct consultation with the Comptroller and Auditor General of India, fulfilling the mandate under Article 148(5) of the Constitution.
Eligibility Grid and Statutory Exclusions
The clarification strictly defines the boundary between military exemptions and standard civil re-employment ceilings to prevent administrative misinterpretation at the PAO level.
Ex-servicemen re-employed in civil posts
Personnel governed by CCS (Pension) Rules 2021
Personnel under CCS (Payment of Gratuity under NPS) Rules 2021
Re-employed personnel from PSUs
Re-employed staff from Autonomous bodies
Govt servants retired on compulsory/compassionate gratuity
What happens to PSU retirees re-employed in Government service?
Unlike military veterans, individuals who retired from Public Sector Undertakings or Autonomous Bodies and are subsequently re-employed in Government service face a strict combined limit. Their new civil gratuity is restricted so that the sum of both gratuities does not exceed the statutory maximum limit prescribed by the government.
Frequently Asked Questions
Does previous military gratuity reduce civil service gratuity under NPS?
No. The DoPPW has officially clarified that gratuity for civil service rendered under the NPS framework will not be subject to any limitation with reference to the gratuity already drawn for prior military service.
Which rule governs the payment of gratuity for NPS employees?
The payments and limitations are governed by the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021, and its subsequent Amendment Rules of 2025.
Are PSU retirees exempted from the gratuity limitation like ex-servicemen?
No. Government servants previously appointed in PSUs or autonomous bodies are subject to the maximum admissible gratuity limitation under Rule 4A when combining both service tenures.
Who issued the clarification on the military gratuity exemption?
The Department of Pension and Pensioners’ Welfare (DoPPW) issued the clarification on December 26, 2025, in consultation with the Department of Expenditure, Ministry of Finance.
हिंदी सारांश
पेंशन और पेंशनभोगी कल्याण विभाग (DoPPW) ने 26 दिसंबर 2025 को एक महत्वपूर्ण कार्यालय ज्ञापन जारी किया है। इसके अनुसार, राष्ट्रीय पेंशन प्रणाली (NPS) के तहत सिविल सेवा में पुनर्नियोजित (re-employed) पूर्व सैनिकों (Ex-Servicemen) की ग्रेच्युटी पर कोई सीमा (limitation) नहीं लगाई जाएगी। आमतौर पर पीएसयू (PSU) से आए कर्मचारियों की पिछली और वर्तमान ग्रेच्युटी को मिलाकर अधिकतम सीमा तय की जाती है, लेकिन सैन्य सेवा से आए कर्मचारियों को इस नियम से पूरी तरह छूट दी गई है। उन्हें अपनी सिविल सेवा की पूरी ग्रेच्युटी मिलेगी, भले ही उन्होंने सेना से रिटायरमेंट के समय ग्रेच्युटी ली हो।
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