Gratuity calculator: Retiring after 3% DA hike? See how much more your gratuity could be
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3% DA hike: Could your retirement gratuity increase by nearly ₹50,000?
The latest 3% dearness allowance (DA) hike will not just increase the monthly salary of central government employees. It can also raise the gratuity calculated at retirement. The difference could be nearly ₹50,000 in an illustration involving an employee with 33 years of qualifying service and ₹1 lakh basic pay.
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Retirement gratuity: How is the amount calculated?
Retirement gratuity is calculated at one-fourth of a month's basic pay plus DA for every completed six-month period of qualifying service. For employees with 33 years or more of qualifying service, the gratuity is 16.5 times the basic pay plus DA, subject to the maximum limit.
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₹1 lakh basic pay and 33 years of service: What changes at 63% DA?
Consider an employee retiring with a basic pay of ₹1 lakh and 33 years of qualifying service, equivalent to 66 completed six-month periods. At 60% DA, the basic pay plus DA amounts to ₹1.60 lakh. With DA rising to 63%, the amount increases to ₹1.63 lakh.
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60% vs 63% DA: Gratuity calculation rises by ₹49,500
The calculation shows a difference of ₹49,500 between the two DA rates. This is an illustration, and the actual difference in gratuity may vary depending on an employee's basic pay and qualifying service.
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DA hike from 60% to 63%: How much extra salary will you get?
The 3% DA hike will increase monthly salary based on an employee's basic pay. For an employee with ₹18,000 basic pay, the monthly increase will be ₹540. At ₹50,000 basic pay, the increase will be ₹1,500, while an employee with ₹1 lakh basic pay will get ₹3,000 more per month.
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Retiring soon? Why the 3% DA hike matters for your gratuity
The DA rate applicable at retirement affects the emoluments used to calculate retirement gratuity. Since DA has increased from 60% to 63% with effect from July 1, 2026, employees retiring after the revised rate takes effect could see a higher gratuity calculation. The actual difference will depend on their basic pay and qualifying service.
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Gratuity calculator: What should employees check before retirement?
To estimate your retirement gratuity, check your basic pay on the date of retirement, the DA rate applicable on that date and your completed six-month periods of qualifying service. The 3% DA hike can increase the amount used in the gratuity calculation, although the final benefit will vary from employee to employee.