New Delhi: In a significant decision which will benefit employees of both public sector undertakings as well as those of the private sector, the Centre on Tuesday approved an amendment bill that seeks to double tax-free gratuity for formal sector employees to Rs 20 lakh.
“The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to introduction of the Payment of Gratuity (Amendment) Bill, 2017, in Parliament,” an official statement said.
The amendment will put the maximum limit of gratuity of employees of the private sector as well as public undertakings and autonomous organisations under the government who are not covered under Central Civil Services (Pension) Rules, at par with central government employees, which is Rs 20 lakh.
The main purpose for enacting this Act is to provide social security to workmen after retirement, whether it is because of rules of superannuation, or physical disablement or impairment of vital parts of the body. The current upper ceiling on gratuity under the Act is Rs 10 lakh.
Before implementation of the 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972, was Rs 10 lakh. However, post rollout, in the case of government servants, the ceiling stands at Rs 20 lakh, effective January 1, 2016.
