C&AG Circular No. 53/Staff Wing/2026 has provided important clarification regarding the grant of a notional increment on 1 July or 1 January to Central Government employees who retire on 30 June or 31 December. The notional increment is to be considered for determining the pension admissible to eligible retired employees.
The circular also clarifies the applicability of the benefit to certain retirees, including those who had approached judicial forums in connection with the issue.
What is the Notional Increment Benefit?
Central Government employees who retire on 30 June or 31 December retire just one day before the date on which their next annual increment would ordinarily become due.
The issue considered in the circular is whether such an employee, having completed the required qualifying service and otherwise satisfying the applicable conditions, can receive the benefit of that increment notionally for pension calculation.
The C&AG circular refers to earlier Headquarters circulars, relevant legal correspondence, the DoPT OM dated 20 May 2025, and judgments of the Hon’ble Supreme Court dated 11 April 2023 and 20 February 2025.
Who Can Get the Notional Increment?
According to Para 3(a) of Circular No. 53/2026, action may be taken to allow the increment falling due on 1 July or 1 January to Central Government employees who:
- retired or are retiring on 30 June or 31 December, one day before the increment became due;
- had rendered the requisite qualifying service as on the date of superannuation; and
- satisfied the requirement of satisfactory service and good conduct.
The circular makes an important clarification: the notional increment is to be reckoned only for calculating pension and not for other pensionary benefits.
Important: It Is for Pension Calculation
One of the most significant points for pensioners is that the increment is not being treated as a general additional increment for every pensionary purpose. The circular specifically states that the notional increment on 1 January/1 July shall be reckoned only for calculating the pension admissible to the employee.
Therefore, pensioners should distinguish between:
Notional increment for pension calculation
and
actual increment for other service or pensionary benefits.
The circular specifically restricts the benefit to pension calculation.
From Which Date Will Enhanced Pension Be Payable?
For third parties/non-litigants in the related judgment dated 11 April 2023, the circular provides that the benefit will take effect from 1 April 2023.
However, the enhanced pension resulting from taking the additional increment into account will be payable on and after 1 May 2023.
The circular clearly states that enhanced pension for the period before 30 April 2023 will not be paid.
This distinction between the effective date and the date from which enhanced pension becomes payable is important while examining pension revision and arrears.
What About Pensioners Who Approached Courts or Tribunals?
Circular No. 53/2026 also contains separate provisions for pensioners who approached judicial forums.
Where a retired employee filed an application for intervention, impleadment, writ petition or original application before the Central Administrative Tribunal, High Court or Supreme Court, the enhanced pension including the one increment will be payable for the period of three years preceding the month in which the relevant application was filed.
There is also a separate provision for personnel who filed writ petitions and succeeded. In such cases, the directions contained in the relevant judgment will operate as res judicata, and enhanced pension taking the one increment into account will have to be paid.
Special Provision Where the Litigation Has Not Become Final
The circular also specifies that its directions and clarifications will not apply to officials or retired employees who have filed an application for intervention before a judicial authority or appellate court where the judgment or appeal has not attained finality.
Further, Para 4 provides a specific clarification concerning retired government employees who filed a writ petition, original application or intervention application after the judgment in Union of India & Anr. Vs. M. Siddaraj. In such cases, the directions contained in Para 3(b) will apply rather than the three-year provision in Para 3(c).
Circular No. 53/2026 Supersedes Earlier Directions
Another important point is that the directions and clarifications contained in Circular No. 53/2026 supersede the earlier Headquarters circulars/directions referred to in the circular on this subject.
This means that offices dealing with pension cases should examine the latest clarification rather than relying solely on earlier instructions.
No Need to Send Pension Re-fixation Orders to Headquarters
The circular also states that the office order, pension re-fixation order or any other order issued in this regard need not be sent to or endorsed to the Headquarters office.
This provision is particularly relevant for administrative offices processing eligible pension cases.
What Should Eligible Pensioners Check?
Employees and pensioners who retired on 30 June or 31 December may examine their individual cases against the conditions specified in the circular.
They should particularly verify:
- Their date of retirement.
- Whether the next increment was due on 1 July or 1 January.
- Whether the required qualifying service condition was satisfied.
- Whether the service record satisfies the applicable conditions.
- Whether the pension has already been revised by taking the notional increment into account.
- Whether they had previously approached CAT, High Court or Supreme Court regarding the issue.
- The date on which any judicial application was filed, where applicable.
- Whether the relevant litigation has attained finality.
Impact on Pension Calculation
The practical importance of this circular is that an eligible employee’s pension calculation can take into account one additional notional increment, even though the employee retired immediately before the normal increment date.
For example, an employee retiring on 30 June whose annual increment would have fallen due on 1 July, or an employee retiring on 31 December whose increment would have fallen due on 1 January, may fall within the scope of the clarification, subject to the conditions specified in the circular.
The resulting benefit is specifically linked to pension calculation, rather than being a general revision of every pensionary benefit.
Key Points of C&AG Circular No. 53/2026
| Issue | Clarification |
| Retirement date | 30 June / 31 December |
| Notional increment date | 1 July / 1 January |
| Purpose | Calculation of admissible pension |
| Qualifying service | Required qualifying service must be satisfied |
| Service condition | Satisfactory work and good conduct |
| Third-party/non-litigant benefit | Effective from 1 April 2023 |
| Enhanced pension payment | On and after 1 May 2023 |
| Earlier period | Enhanced pension before 30 April 2023 not payable |
| Certain litigants | Three-year period preceding the month of filing, subject to circular conditions |
| Successful writ petitioners | Relevant judgment directions apply |
| Pending litigation | Special conditions apply |
| Earlier directions | Superseded as specified in the circular |
Conclusion
C&AG Circular No. 53/Staff Wing/2026 is an important clarification for Central Government employees and pensioners who retired on 30 June or 31 December and whose annual increment would have become due on 1 July or 1 January.
The key takeaway is that, subject to the prescribed conditions, the one notional increment can be taken into account for calculating pension. The circular also provides separate treatment for non-litigants, successful litigants and certain pensioners who approached judicial forums.
Pensioners should therefore examine their pension records and relevant retirement details in light of this latest clarification before approaching their department, pension authority or other competent forum.