Residuary gratuity

Residuary gratuity is the deficiency payment granted under Rule 45(3) of the CCS (Pension) Rules, 2021, notified as G.S.R. 868(E) on 20 December 2021, where a retired central government employee dies within five years of retirement and the retirement benefits already received fall below 12 times the emoluments drawn at retirement. It closes the gap between a death in service and a death shortly after it.

The rule sets a floor and three set-offs, and pays the difference. Against 12 times emoluments it counts the service gratuity or the pension actually received to the date of death, the retirement gratuity admissible under Rule 45(1), and the commuted value of any portion of pension commuted. Nothing else enters the reckoning. Where the three sums fall short, the residue is granted to the family in the manner indicated in Rule 47(1).

The benefit has no amount of its own. It is nil for most full careers, because a retirement gratuity running to 16.5 times emoluments at 33 years of qualifying service clears the 12 times floor on its own. It bites at the other end of the service range, where a retiree left with a service gratuity rather than a pension has received a single modest lump sum and then dies inside the window.

Rule 45(3) and the two fixed parameters

Rule 45(3) of the CCS (Pension) Rules, 2021 grants a residuary gratuity equal to the deficiency below 12 times emoluments where a retiree dies within five years of retirement. The gazette text, at page 147 of G.S.R. 868(E) dated 20 December 2021, reads:

In case a Government servant, who, on retirement, became eligible for a service gratuity or pension, dies within five years from the date of his retirement from service including compulsory retirement as a penalty and the sums actually received by him at the time of his death on account of such gratuity or pension, together with the retirement gratuity admissible under sub-rule (1) and the commuted value of any portion of pension commuted by him are less than the amount equal to 12 times of his emoluments, a residuary gratuity equal to the deficiency may be granted to his family in the manner indicated in sub-rule (1) of rule 47.

Two parameters are fixed and everything else is arithmetic on them. The window is five years from the date of retirement, and the floor is 12 times emoluments. A death on the day after the fifth anniversary takes the case outside the rule however small the sums received, and a retiree whose benefits already reach the floor on the day of death draws nothing however early the death falls.

The rule reaches compulsory retirement imposed as a penalty, in terms. That matters because an employee compulsorily retired under Rule 11(vii) of the CCS (CCA) Rules, 1965 retires on a compulsory retirement pension that may have been reduced, and the reduced pension is what gets set off. The definitions clause, Rule 3(1)(o)(iii), lists the residuary gratuity payable under sub-rule (3) of Rule 45 as one of the three gratuities the Rules recognise alongside the retirement gratuity and the death gratuity, which is what carries Rules 8, 47, 48 and 49 across to it.

The predecessor was Rule 50(2) of the CCS (Pension) Rules, 1972, which carried the same 12 times formula, pointed at Rule 51(1) rather than Rule 47(1), and spelled out in the rule text itself the words “including ad hoc increase, if any” that the 2021 Rules have moved into Form 13.

Emoluments for the 12 times floor

Emoluments for the residuary gratuity floor are fixed by Rule 45(6) of the CCS (Pension) Rules, 2021, not by Rule 31 standing alone, and they include dearness allowance. This is the point at which the article most often goes wrong elsewhere, because Rule 31 is the general emoluments rule and Rule 31 contains no dearness allowance.

Rule 31(1) provides that emoluments means basic pay as defined in Rule 9(21)(a)(i) of the Fundamental Rules, 1922 which the employee was receiving immediately before retirement, and that it will also include non-practising allowance granted to a medical officer in lieu of private practice. The Explanation to Rule 31 adds that stagnation increment is treated as emoluments for the calculation of retirement benefits. Those two additions are the whole list; no other allowance enters.

Rule 45(6) then modifies that base for the whole of Rule 45, the residuary gratuity included, through two provisos. The first substitutes average emoluments under Rule 32, reckoned over the last ten months, where emoluments were reduced during that period, so a reversion or a penalty of reduction in pay in the final months does not depress the floor to the reduced figure. The second provides that the dearness allowance admissible on the date of retirement is also treated as emoluments for the purpose of Rule 45.

The consequence is an asymmetry the rule does not remark on and the reader needs. The floor is computed on a dearness-allowance-inclusive figure, while the pension being set off against it is computed on a dearness-allowance-exclusive one: Rule 44(1) fixes pension at 50% of emoluments or average emoluments, whichever is more beneficial, subject to a minimum of Rs. 9,000 and a maximum of Rs. 1,25,000 a month, and those are Rule 31 or Rule 32 emoluments without dearness allowance. Dearness relief is granted separately by Rule 52. At a dearness allowance of 55%, the floor is 55% higher than 12 times basic pay while the pension set off against it is not, which is a structural reason the deficiency survives more often than the bare arithmetic suggests.

The three sums set off against the floor

Rule 45(3) sets off three sums and the list is closed. They are the service gratuity or the pension actually received to the date of death, the retirement gratuity admissible under Rule 45(1), and the commuted value of any portion of pension commuted.

The first head has two limbs, and the first limb is the one that carries most of the cases. Rule 45(3) counts “the sums actually received by him at the time of his death on account of such gratuity or pension”, where “such gratuity” refers back to the service gratuity the retiree became eligible for on retirement. An employee who retired with less than ten years of qualifying service draws no pension at all: Rule 44(2) gives a service gratuity instead, at half a month’s emoluments for each completed six-monthly period of qualifying service. That single lump sum is the sum set off, and there is no monthly stream to accumulate towards the floor. Form 13, the statutory claim form, keeps both limbs visible at item 3, which reads “The amount of pension (including ad-hoc increase, if any)/service gratuity drawn by the deceased till the date of death”.

Dearness relief does not enter that head. Rule 45(3) counts sums received on account of gratuity or pension, and Rule 3(1)(f) treats dearness relief as distinct from those benefits, the definition of family pension in the Rules stating expressly that it does not include dearness relief. Form 13 names ad hoc increase and does not name dearness relief. Where the retiree had commuted part of the pension, it is the reduced pension actually drawn that counts, because the commuted value is already a separate head and counting the unreduced pension would set off the same money twice.

The second head is the retirement gratuity admissible under Rule 45(1), not the amount disbursed. The distinction is real and it works against the family. A retirement gratuity withheld under Rule 8(1), or one still unpaid at the date of death and later paid to the family under Rule 47(3), is nevertheless set off at the admissible figure. The third head, the commuted value of the portion of pension commuted, is the lump sum received on commutation of pension and is set off as received.

Nothing beyond those three enters. Family pension does not, and neither does any ex gratia or insurance payment.

Worked example: the service gratuity retiree

The residuary gratuity pays where a short-service retiree took a service gratuity and died inside the window. The illustrative figures below are constructed by salary-calculator.in to show the mechanics of Rule 45(3), and are not drawn from any order.

An employee retires with 8 years of qualifying service on a basic pay of Rs. 50,000 a month, at a dearness allowance of 55%. Emoluments for Rule 45 are Rs. 50,000 plus Rs. 27,500, or Rs. 77,500, and the floor under Rule 45(3) is 12 times that, Rs. 9,30,000.

Eight years is 16 completed six-monthly periods. Qualifying service is under ten years, so Rule 44(1) gives no pension and Rule 44(2) gives a service gratuity instead. Suppose the service gratuity worked out at Rs. 4,00,000 and the retirement gratuity admissible under Rule 45(1)(a), at one-fourth of emoluments for each completed six-monthly period, at Rs. 3,10,000. There is no pension, so there is no commuted value and no monthly stream.

The two sums come to Rs. 7,10,000 against a floor of Rs. 9,30,000. The deficiency is Rs. 2,20,000, and that is the residuary gratuity granted to the family. The second proviso to Rule 45(1) rounds a gratuity to the next higher rupee.

Contrast the full-career case. A retiree with 33 years of qualifying service draws a retirement gratuity of 16.5 times emoluments under Rule 45(1)(a), which clears the 12 times floor on that head alone before the pension or any commuted value is counted. The deficiency is nil and no residuary gratuity is payable, even for a death in the first month after retirement. This is why the benefit is a targeted floor for short service rather than a payment most families ever see.

Who receives the residuary gratuity

Rule 45(3) grants the residuary gratuity to the family in the manner indicated in Rule 47(1) of the CCS (Pension) Rules, 2021. The cross-reference is to the payment rule, not to the nomination rule, and the distinction matters because Rule 46(1) confers the nomination right in terms of the retirement gratuity and the death gratuity payable under Rule 45 without naming the residuary gratuity. The nomination reaches the residuary gratuity through Rule 47(1)(a) read with the Rule 3(1)(o) definition of gratuity, not directly.

Rule 47(1)(a) pays the nominee where a nomination made under Rule 46 subsists, in the share the nomination specifies. Where no nomination subsists, Rule 47(1)(b) distributes in two tiers drawn from the Explanation below Rule 45(6). The first tier is clauses (i) to (v): the wife or wives, the husband, sons, unmarried daughters, and widowed or divorced daughters. They share in equal shares, and the second tier at clauses (vi) to (xi), which reaches the father, mother, brothers, unmarried, widowed and divorced sisters and married daughters, is opened only if no member of the first tier survives.

Two bars carry across from the gratuity provisions by way of Rule 3(1)(o). Rule 48 suspends the share of a claimant charged with the murder of the employee and debars a claimant convicted of it, its Explanation extending the bar to abetment of death by suicide. Rule 49 lapses an unclaimed gratuity to Government where there is no family and no subsisting nomination, subject to production of a succession certificate. Where a claimant is a minor or a person with a disability, Rule 47(5) pays the guardian and Rule 47(7) permits payment against an indemnity bond in Format 7 where no guardianship certificate is produced.

Claiming the residuary gratuity

A fresh claim is required. Rule 79(6) of the CCS (Pension) Rules, 2021 provides that where a residuary gratuity becomes payable on the death of a retired employee, the Head of Office shall sanction its payment on receipt of a claim or claims in Form 13 from the person or persons eligible to receive it, and Form 13 is to be filled in separately by each claimant. A nomination already on record settles who is paid; it does not remove the Form 13 requirement.

Form 13 is where the arithmetic of Rule 45(3) is actually done. Its items carry the emoluments at retirement, the pension including ad hoc increase or the service gratuity drawn to the date of death, the retirement gratuity, and the commuted value, which is the whole set-off list transcribed into a form. It also carries a dedicated block for a guardian where a claimant is a minor.

Rule 80(1) then requires the Accounts Officer to authorise payment within one month from the date of receipt of the sanction. The whole of Chapter XII of the Rules, headed “Sanction of family pension and residuary gratuity in respect of deceased or missing pensioners or family pensioner”, is the procedural home of the benefit.

Rule 79(6) refers to a residuary gratuity payable “under sub-rule (2) of rule 45”. The residuary gratuity is at sub-rule (3); sub-rule (2) deals with death by suicide. The cross-reference is a misprint and the substantive rule is Rule 45(3).

Interest where payment is delayed

Interest is payable on a delayed residuary gratuity, and the two provisions that give it do not measure the delay from the same date. The proviso to Rule 80(1) of the CCS (Pension) Rules, 2021 gives interest where payment is delayed beyond three months from the date of submission of the claim, with responsibility for the delay to be fixed, in accordance with Rule 65. Rule 65(5)(b) instead runs its three months from the date of death where the employee dies during service or after retirement.

The practical effect is that the earlier of the two clocks can start well before Form 13 is submitted, so a family that took time to file is not necessarily out of time on interest. Rule 65(1) fixes the rate at the rate applicable to the General Provident Fund, Rule 65(2) requires satisfaction at Secretary or Joint Secretary level that the delay was attributable to administrative lapse, and Rule 65(3)(b) requires the interest to be paid within two months of sanction. The withholding and recovery provisions operate separately and are not a ground for interest.

Residuary gratuity compared with the death gratuity

The residuary gratuity and the death gratuity never arise on the same death. Death gratuity under Rule 45(1)(b) of the CCS (Pension) Rules, 2021 is payable where the employee dies in service, on a slab scale with no minimum-service condition. Residuary gratuity under Rule 45(3) is payable where a retired employee dies within five years, and it is only the deficiency below 12 times emoluments.

The Rule 45(1)(b) Table sets the death gratuity as follows:

Source: Rule 45(1)(b), CCS (Pension) Rules, 2021, G.S.R. 868(E) dated 20 December 2021, subject to the ceiling in the proviso to Rule 45.

Set beside that table, the 12 times residuary floor is not an arbitrary number. It is exactly the death gratuity a servant with 5 years or more but less than 11 years of qualifying service would have left behind had the death fallen a day before retirement. The residuary gratuity holds a short-service retiree’s family at that same figure for five years after retirement, which is the policy the rule is expressing.

The family pension is a third and separate benefit. It is granted by Rule 50 on the pensioner’s death, it is not among the sums Rule 45(3) sets off, and it neither reduces nor is reduced by the residuary gratuity. Rule 79(1) puts the two side by side, requiring the Head of Office to ascertain whether any family pension or residuary gratuity or both are payable in respect of the deceased pensioner. A family in this position receives the residuary top-up as a lump sum and the family pension as a continuing monthly income.

The Rs. 25 lakh ceiling

The gratuity ceiling does not cap the residuary gratuity on the face of the rule, and it reaches it indirectly instead. The proviso to Rule 45 of the CCS (Pension) Rules, 2021 provides that the amount of retirement gratuity or death gratuity payable under the rule shall in no case exceed the ceiling. It names those two benefits and names neither the service gratuity nor the residuary gratuity, and no aggregate cap across the gratuities appears in Rule 45, Rule 47 or Rule 3(1)(o).

The ceiling stands at Rs. 25 lakh with effect from 1 January 2024, raised from Rs. 20 lakh by Department of Pension and Pensioners’ Welfare Office Memorandum No. 28/03/2024-P&PW(B)/Gratuity/9559 dated 30 May 2024. The trigger is automatic rather than discretionary: paragraph 2 of that Office Memorandum records that the ceiling rises by 25% whenever dearness allowance reaches 50% of basic pay, following the mechanism in Office Memorandum No. 38/37/2016-P&PW(A)(i) dated 4 August 2016, and the condition was met when Department of Expenditure Office Memorandum No. 1/1/2024-E-II(B) dated 12 March 2024 raised dearness allowance from 46% to 50% from 1 January 2024. Paragraph 7 of the 30 May 2024 order records that the formal amendment to the two rule sets would be notified separately, so the gazette text of the 2021 Rules still prints twenty lakh rupees.

The ceiling still bears on the arithmetic, because the retirement gratuity that Rule 45(3) sets off is set off at the capped figure where the cap bites. A retiree whose retirement gratuity was cut to Rs. 25 lakh by the proviso has a smaller sum going against the floor than the uncapped computation would have produced.

One point is genuinely open. At the top of the pay matrix a 12 times floor computed on basic pay plus dearness allowance can exceed Rs. 25 lakh, which raises the question whether the gratuity ceiling caps a residuary gratuity that would otherwise cross it. The rule text does not cap it, and no clarification from the Department of Pension and Pensioners’ Welfare settles the point either way.

Income tax on a residuary gratuity received by the family

A residuary gratuity received by the family of a deceased central government pensioner is excluded from total income under Section 11 read with Schedule III, Table serial number 38 of the Income-tax Act, 2025. Column B of that entry covers any gratuity computed as provided in Section 19(1), Table serial 3, column C names the eligible persons as any widow, children or dependants on the death of an employee, and column D states the conditions as Nil. Schedule III is headed “Income not to be included in total income of eligible persons”, so the receipt drops out of the computation entirely, with no monetary limit.

The provision the corpus uses for a retiring employee does not transfer to the family, and the distinction is worth stating plainly. Section 19(1), Table serial 3 allows a deduction of the entire amount of death-cum-retirement gratuity referred to in Section 19(2)(g), and Section 19(2)(g)(A) covers gratuity received under the Central Civil Services (Pension) Rules, 2021 by name. That is a deduction in computing income chargeable under the head Salaries, which is the right home for the retiring employee and the wrong one for a widow or a child who has no salary income from that employment. Where the sum falls to be computed under the head Income from other sources through the residual charge in Section 92(1), Section 93(1)(h) allows the entire amount as a deduction for income in the nature of gratuity referred to in Section 19(2)(g) received on the death of the employee, sitting immediately beside the family pension deduction at Section 93(1)(d).

Either route relieves the receipt in full. The residuary gratuity qualifies as a gratuity under the 2021 Rules because Rule 3(1)(o)(iii) says so.

The Income-tax Act, 1961 was repealed on 1 April 2026 by Section 536(1) of the Income-tax Act, 2025, so Section 10(10)(i) of the 1961 Act, which relieved this receipt before that date, is history and not the governing provision. The broader position of a pensioner and a family pensioner is set out in income tax for pensioners.

Residuary gratuity under the National Pension System

Rule 22(4) of the CCS (Payment of Gratuity under NPS) Rules, 2021, notified as G.S.R. 658(E) on 23 September 2021 and amended by G.S.R. 258(E) dated 24 April 2025, grants a residuary gratuity to an employee covered by the National Pension System or the Unified Pension Scheme on the same 12 times floor and the same five-year window.

The set-off is what differs. Rule 22(4) counts the retirement gratuity and the sums actually received on account of the annuity under the National Pension System, and pays the deficiency to the family in the manner set out in Rule 24(1) of those Rules. There is no commuted value limb, because such a retiree draws an annuity rather than a commuted pension. The detail of the scheme is in gratuity under the NPS Rules, 2021, and the wider comparison in gratuity for central government employees.

An All India Services officer is outside both rule sets. Rule 19(3)(b) of the All India Services (Death-cum-Retirement Benefits) Rules, 1958 grants the same 12 times deficiency, and differs in two ways that change outcomes. It carries no five-year window, so a death at any remove from retirement can attract it. And it measures the sums to which the officer had become entitled at the time of death rather than the sums actually received, which closes the gap the CCS rule leaves where a benefit was sanctioned but not disbursed.

When nothing is payable

Three situations produce no residuary gratuity, and two of them are on the face of Rule 45(3).

Death more than five years after retirement takes the case outside the rule entirely, however the sums received compare with the floor. A total of the three set-off sums that already equals or exceeds 12 times emoluments leaves no deficiency, which is the ordinary outcome for a full career, where the retirement gratuity alone reaches 16.5 times emoluments at 33 years of qualifying service.

The third is the missing pensioner. Rule 51 of the CCS (Pension) Rules, 2021 provides family pension for the family of a retired employee who has gone missing and, at Rule 51(4), the retirement gratuity that had not been paid, and it provides no residuary gratuity. Rule 79(1) is drafted consistently, extending residuary gratuity only to a deceased pensioner. The benefit does not arise until death is established.

A residuary gratuity that does arise can still be withheld. Rule 8(1) reserves the Government’s right to withhold a pension or gratuity, or both, and “gratuity” is defined by Rule 3(1)(o) to include the residuary gratuity, which brings it within Rule 8. The bars in Rules 48 and 49 operate on the same footing.

The 8th Central Pay Commission, constituted by Department of Expenditure Resolution F. No. 01-01/2025-E.III(A) dated 3 November 2025, will revise pay and so the emoluments on which the 12 times floor is computed. The structure of the benefit, the window and the floor, is set by the pension rules and is not a matter for a pay commission. Any revised figure attributed to the Commission is a projection until it reports and revised rules are notified.

Related Articles

• Death gratuity
• Gratuity for central government employees
• Service gratuity
• Gratuity under the NPS Rules, 2021
• Withholding and recovery from gratuity
• Family pension
• Family pension calculation
• Enhanced family pension
• Commutation of pension
• Commutation factor table
• Restoration of commuted pension
• Nomination for pension and gratuity
• CCS (Pension) Rules, 2021
• CCS (CCA) Rules, 1965
• Central government pension
• Pension calculation
• Qualifying service
• Superannuation
• Retiring pension
• Invalid pension
• Compensation pension
• Voluntary retirement
• Compulsory retirement
• Pay matrix
• Dearness allowance
• Dearness relief
• General Provident Fund
• All India Services
• Income tax for pensioners
• Income-tax Act, 2025
• Last Pay Certificate
• PPO and life certificate
• Minimum and maximum pension
• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• Department of Pension and Pensioners’ Welfare
• 8th Central Pay Commission

External references

• Department of Pension and Pensioners’ Welfare
• Pensioners’ Portal, Government of India
• Central Pension Accounting Office
• Department of Expenditure, Ministry of Finance
• Department of Personnel and Training
• The Gazette of India
• Income Tax Department

References

1. Central Civil Services (Pension) Rules, 2021, notified as G.S.R. 868(E) on 20 December 2021: Rule 45(3) (residuary gratuity), Rule 45(1)(a) and (b) with the death-gratuity Table and the ceiling proviso, Rule 45(4) (six-monthly rounding), and Rule 45(6) with its first proviso (average emoluments under Rule 32) and second proviso (dearness allowance treated as emoluments).
2. Central Civil Services (Pension) Rules, 2021, Rule 3(1)(o)(iii), defining “gratuity” to include the residuary gratuity payable under sub-rule (3) of Rule 45, and Rule 3(1)(f) distinguishing dearness relief from pension and family pension.
3. Central Civil Services (Pension) Rules, 2021, Rule 31(1) and its Explanation (basic pay under Rule 9(21)(a)(i) of the Fundamental Rules, 1922, non-practising allowance and stagnation increment), Rule 32 (average emoluments), Rule 44(1) and 44(2) (pension and service gratuity), and Rule 52 (dearness relief).
4. Central Civil Services (Pension) Rules, 2021, Rule 46 (nomination), Rule 47(1), (3), (5) and (7) (persons to whom gratuity is payable, guardianship and indemnity bond), Rule 48 and Rule 49 (debarment and lapse), Rule 8 (withholding), and Rule 51 (missing pensioner).
5. Central Civil Services (Pension) Rules, 2021, Chapter XII: Rule 79(1) and Rule 79(6) with Form 13, and Rule 80(1) with its interest proviso, read with Rule 65 (interest on delayed payment).
6. Central Civil Services (Pension) Rules, 1972, Rule 50(2), the predecessor provision, read with Rule 51(1) of those Rules.
7. Department of Pension and Pensioners’ Welfare Office Memorandum No. 28/03/2024-P&PW(B)/Gratuity/9559, dated 30 May 2024, raising the retirement and death gratuity ceiling to Rs. 25 lakh with effect from 1 January 2024, read with Department of Expenditure Office Memorandum No. 1/1/2024-E-II(B), dated 12 March 2024 (dearness allowance raised to 50%), and Office Memorandum No. 38/37/2016-P&PW(A)(i), dated 4 August 2016 (the 25% escalation mechanism).
8. Department of Pension and Pensioners’ Welfare Office Memorandum No. 28/91/2022-P&PW(B)/8331, dated 11 October 2022, on grant of retirement gratuity and death gratuity under the CCS (Pension) Rules, 2021. Its paragraph 3 states the ceiling as twenty lakh rupees and is superseded on that figure by the Office Memorandum of 30 May 2024.
9. Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, notified as G.S.R. 658(E) on 23 September 2021 on F. No. 59/03/2019-P&PW(B), as amended by G.S.R. 258(E) dated 24 April 2025: Rule 22(4) (residuary gratuity) and Rule 24(1) (persons to whom payable).
10. All India Services (Death-cum-Retirement Benefits) Rules, 1958, Rule 19(3)(b).
11. Income-tax Act, 2025: Section 11 read with Schedule III, Table serial number 38; Section 19(1), Table serial 3 and Section 19(2)(g)(A); Section 92(1) and Section 93(1)(h); and Section 536(1), repealing the Income-tax Act, 1961 with effect from 1 April 2026.
12. Ministry of Finance, Department of Expenditure, Resolution F. No. 01-01/2025-E.III(A), dated 3 November 2025, constituting the 8th Central Pay Commission.