Gratuity calculator: How 3% DA hike can increase your retirement gratuity by nearly Rs 50,000

The latest 3% dearness allowance (DA) hike will not just increase the monthly salary of central government employees. It can also push up the gratuity amount for an employee who is just about to retire.

On Tuesday, the centre increased the DA of central government employees and DR of pensioners from 60% to 63%. The new rates will come into effect from 1 July 2026 till the government makes the next announcement..

The hike in terms of salary can be small but it can make a big difference in gratuity for employees who are about to retire soon.

How 3% DA can help increase gratuity at retirement by Rs 50,000?

Retirement gratuity is calculated @ 1/4th of a month’s basic pay plus dearness allowance (DA) drawn on the date of retirement for each completed six monthly period of qualifying service.

The retirement gratuity payable for qualifying service of 33 years or more is 16½ times the basic pay plus DA, subject to a maximum of Rs 20 lakhs, which increased to Rs 25 lakh when the DA reached 50% in January 2024.

Here, we take the example of a person with 33 years of qualifying service and retiring at a basic pay of Rs 1 lakh. The illustration shows the difference in the gratuity if the same person retires at 60% and 63% DA rates, respectively.

Assumptions

Basic pay at retirement	₹ 1,00,000
Qualifying service (years)	33
Qualifying service half years	66
DA earlier	60%
DA now	63%

Particulars	At 60% DA	At 63% DA
Basic pay	₹ 1,00,000	₹ 1,00,000
DA	₹ 60,000	₹ 63,000
Emoluments for gratuity (basic+DA)	₹ 1,60,000	₹ 1,63,000
Gratuity amount	₹ 26,40,000	₹ 26,89,500
		₹ 49,500

However, this is an illustration and the actual difference in gratuity may vary.

How a 3% DA hike will reflect in central government employees’ salary??

Basic pay	DA at 60%	DA at 63%	Monthly increase
₹18,000	₹10,800	₹11,340	₹540
₹25,000	₹15,000	₹15,750	₹750
₹40,000	₹24,000	₹25,200	₹1,200
₹50,000	₹30,000	₹31,500	₹1,500
₹80,000	₹48,000	₹50,400	₹2,400
₹1,00,000	₹60,000	₹63,000	₹3,000