8th Pay Commission: Will Your Gratuity Hit ₹75L?

Employee unions want the gratuity ceiling raised from ₹20 lakh to ₹50–75 lakh under the 8th Pay Commission. If approved, millions of salaried workers and government employees could receive significantly larger retirement payouts. Here is what you need to know now.

Here's what happened: Employee bodies have formally proposed raising the gratuity ceiling to ₹50–75 lakh under 8th Pay Commission recommendations, up from the current ₹20 lakh limit set in 2010.. Proposals also include indexing the gratuity ceiling to inflation or DA hikes so the cap automatically updates every few years — ending the need for one-time revisions.. Enhanced death gratuity benefits are being sought for families of employees who die in service, with revised calculation formulas to reflect current salary levels more accurately..

What you should do: Calculate your current gratuity entitlement using the formula: (Last drawn salary × 15 × Years of service) ÷ 26 — check if you are near or above the ₹20L cap.. If you are a private sector employee, verify your employer is covered under the Payment of Gratuity Act 1972 — establishments with 10 or more employees are legally required to pay gratuity.. Nominate or update your gratuity nominee with your HR department now — especially critical if you are married or have dependents, as death gratuity goes directly to the nominee..

Gratuity received up to ₹20 lakh is fully tax-free for private employees. If the ceiling rises to ₹75 lakh, the tax-exempt limit is likely to increase too — potentially saving you ₹7–15 lakh in taxes at retirement.