In a recent update under the 7th Pay Commission, the Central Government has revised the provision of dress allowance for its employees. The change primarily affects those who join government service on or after July 1, 2025, introducing a more proportionate system for allowance distribution.
Until now, the dress allowance—typically disbursed once annually in July—was granted in full to all eligible employees, regardless of when they joined during the financial year. However, under the newly issued notification, this one-size-fits-all model has been scrapped for new joiners.
Dress Allowance to Be Paid Pro-Rata for New Recruits
According to the revised policy, employees appointed after July 1, 2025, will no longer receive the full annual dress allowance by default. Instead, the allowance will be calculated on a monthly basis, starting from the month of joining and continuing until June 30 of the following year.
For instance, if an employee begins service in October 2025, they will be entitled to dress allowance for nine months, covering October to June. This adjustment ensures a fairer distribution based on actual months of service rather than providing the full allowance irrespective of joining date.
It is important to note that this rule is applicable only to newly recruited employees and will not impact those already serving under the existing structure.
Pension Policy Update: Gratuity Now Available to NPS Employees in Specific Cases
Alongside the dress allowance revision, the government has also announced an important update concerning pension benefits.
Employees covered under the Integrated Pension Scheme—part of the New Pension Scheme (NPS)—will now be eligible to receive gratuity benefits traditionally available under the Old Pension Scheme (OPS). This provision applies in cases where an employee passes away while in service or is compulsorily retired due to incapacity or disability.
This move follows a directive from the Department of Pension and Pensioners’ Welfare, which has now formally allowed affected employees or their families to opt for OPS benefits under these special circumstances. The decision is expected to provide significant financial relief and security to the families of affected government employees.
Why These Changes Matter
These amendments aim to bring greater transparency and equity in how government benefits are distributed. For new employees, the dress allowance rule ensures fair entitlement, while the pension-related change acknowledges the unpredictable nature of service-related hardships and provides a crucial safety net.
As policies continue to evolve, employees are encouraged to stay informed and consult their HR departments or official circulars for clarity on how these updates might affect their entitlements.