Gurkha pensioners will receive a total of £46m extra this financial year (Picture: MOD).
Veterans from the Brigade of Gurkhas are to receive a £15 million increase to their pensions overall.
All former personnel who joined prior to 2007 will get the increase, which is the equivalent to 2.2 billion Nepali Rupees.
The change was confirmed by Armed Forces Minister Mark Lancaster and will affect 22,000 Gurkha veterans and their families.
Veterans could receive up to 34% more in their pensions, with the increases being backdated to 1 January 2016 and means Gurkha pensioners will receive a total of £46m (6.7bn Nepali Rupees) extra this financial year.
The Ministry of Defence has also confirmed a £25 million investment in medical support for Gurkha veterans living in Nepal (the same as 3.6 billion Nepali Rupees).
Minister for the Armed Forces Mark Lancaster said: "This pension increase for Gurkha veterans, alongside long-term funding for healthcare support in Nepal, will make a difference to the lives of Gurkha veterans and their families.
"I have huge respect for the Gurkhas, who have been important to the British military for more than 200 years, and I hope will be for many years to come.
"These are significant sums which reflect the outcome of dialogue with Gurkha veterans and the Government of Nepal."