If this happens Bank Employees will also get this benefit.
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Gratuity payment ceiling to double to Rs20 lakh
New Delhi: The central government Thursday agreed to allow millions of organised sector employees to withdraw up to Rs20 lakh from their gratuity corpus, double the amount permitted now.
Currently, even if a worker accumulates more than Rs10 lakh as gratuity contribution, he or she is allowed to withdraw only Rs10 lakh.
The agreement came following a meeting between the labour ministry and representatives from states, employees and employers on Thursday.
“All the stakeholders—states, Centre, unions and the industry representatives were on the same page to enhance the gratuity ceiling from Rs10 lakh to Rs20 lakh,” a labour ministry spokesperson said after the meeting.
This follows the 7th Pay Commission report allowing government employees to withdraw up to Rs 20 lakh gratuity, which left out a significantly bigger number of private sector employees. The labour ministry will now bring a formal amendment to the Payment of Gratuity Act to implement the change.
All companies and establishments deploying 10 or more workers comes under the Gratuity Act. Gratuity is calculated as: Last drawn salary × 15/26 × number of years of service. Salary means basic pay plus dearness allowance; 15/26 means 15 working days’ pay of the 26 days of pay.
“It was logical that we extend the ceiling to Rs20 lakh and the labour ministry did not have any objection today,” said Virjesh Upadhyay, general secretary of the Bharatiya Mazdoor Sangh, a trade union affiliated to the Bharatiya Janata Party.
D.L. Sachdeva, national secretary of the All India Trade Union Congress (AITUC) who attended the meeting, said that besides the ceiling hike, labour minister Bandaru Dattatreya agreed to “consider reducing the five years’ gratuity payment rule”.
Currently, an employee with at least five years of continuous service is eligible to get gratuity, which forms part of the overall salary package of an employee, but not paid monthly.
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Gratuity payment ceiling to double to Rs20 lakh
New Delhi: The central government Thursday agreed to allow millions of organised sector employees to withdraw up to Rs20 lakh from their gratuity corpus, double the amount permitted now.
Currently, even if a worker accumulates more than Rs10 lakh as gratuity contribution, he or she is allowed to withdraw only Rs10 lakh.
The agreement came following a meeting between the labour ministry and representatives from states, employees and employers on Thursday.
“All the stakeholders—states, Centre, unions and the industry representatives were on the same page to enhance the gratuity ceiling from Rs10 lakh to Rs20 lakh,” a labour ministry spokesperson said after the meeting.
This follows the 7th Pay Commission report allowing government employees to withdraw up to Rs 20 lakh gratuity, which left out a significantly bigger number of private sector employees. The labour ministry will now bring a formal amendment to the Payment of Gratuity Act to implement the change.
All companies and establishments deploying 10 or more workers comes under the Gratuity Act. Gratuity is calculated as: Last drawn salary × 15/26 × number of years of service. Salary means basic pay plus dearness allowance; 15/26 means 15 working days’ pay of the 26 days of pay.
“It was logical that we extend the ceiling to Rs20 lakh and the labour ministry did not have any objection today,” said Virjesh Upadhyay, general secretary of the Bharatiya Mazdoor Sangh, a trade union affiliated to the Bharatiya Janata Party.
D.L. Sachdeva, national secretary of the All India Trade Union Congress (AITUC) who attended the meeting, said that besides the ceiling hike, labour minister Bandaru Dattatreya agreed to “consider reducing the five years’ gratuity payment rule”.
Currently, an employee with at least five years of continuous service is eligible to get gratuity, which forms part of the overall salary package of an employee, but not paid monthly.
Beyond RS 3 lacs Gratuity received is taxable except for Central and State govt employees.
ReplyDeleteNo.
ReplyDeleteWhen will gratuity act be amended?
ReplyDeleteIs there any bill pending in
Parliament
Elango C
It is the proposal stage only.
DeleteIt is the proposal stage only.
DeleteReply plz
ReplyDeleteReply plz
ReplyDeleteIs it applicable to bank employees retired on or after 01.01.2016.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteOn retirement Ihave completed 35 years and 6 month kindly clarify d number of years eligible for gratuity
ReplyDeleteOn retirement my Service will be 35 yrs
ReplyDeleteand 6 months can you tell me d eligible
Period for gratuity calculation
http://www.indiatvnews.com/business/india-bill-to-double-tax-free-gratuity-to-rs-20-lakh-likely-in-monsoon-session-says-labour-minister-390436
ReplyDeleteA bill seeking to double tax-free gratuity ceiling to Rs 20 lakh is likely to be pushed for passage in the upcoming monsoon session of Parliament, beginning July 17, Labour Minister Bandaru Dattatreya has said , adding that it will soon be put before the Union Cabinet for approval. The bill, which will seek to bring amendments to the Payment of Gratuity Act, will also enable the central government to change the ceiling for tax-free gratuity after factoring in rise in income levels by an executive order bypassing Parliament route to amend the law.
ReplyDelete"This is on our agenda. It may come in this session (monsoon). It will soon go to the Cabinet for approval," Dattatreya told PTI when asked about the status of Payment of Gratuity Amendment Bill.
Once the amendment in the Act goes through the Parliament, formal sector workers would be eligible for up to Rs 20 lakh tax-free gratuity. Earlier in February, the central trade unions had agreed on the proposal in a tripartite consultation with the Labour ministry.
However, the unions had demanded the removal of conditions asking to have at least 10 employees in an establishment and minimum five years of service for payment of gratuity.
At present, as per the Payment of Gratuity Act, an employee is required to do minimum service of five years to become eligible for gratuity amount. Moreover, the Act applies to those establishments where the number of employees is not less than 10. Trade unions had demanded that the amended provision regarding maximum amount should be made effective from January 1, 2016, as done in the case of central government employees.
Besides, that rate of 15 days wages for each completed year of service be raised to 30 days wages, the unions had said during the tripartite meeting.
The proposed amendment to the Payment of Gratuity Act as circulated by the government only deals with enhancing the ceiling of maximum amount under Section 4(3) of the Act from Rs 10 lakh to Rs 20 lakh.
The proposed amendment is being brought to bring the maximum ceiling amount to Rs 20 lakh in line with the 7th Central Pay Commission's recommendations as accepted by the government.
The relevant amendment for central government employees was notified on July 25, 2016 and the enhanced amount ceiling was made effective from January 1, 2016.
The unions were of the view that the delay of eight months for employees covered under the Payment of Gratuity Act should not result in adversely affecting the interest of the concerned employees.
The employers, as well as state representatives, had also agreed to the proposal of raising the amount of gratuity to Rs 20 lakh in the tripartite meeting held last month.
Is the Gratutity ceiling for Public Sector Banks amended
ReplyDeleteIs it applicable for employees retired on or after 0101 2016