Payment of Gratuity (Amendment) Bill, 2017 Passed by Parliament
Payment of Gratuity (Amendment) Bill, 2017
was passed by the Lok Sabha on 15th March,
2018 followed by the Rajya Sabha also passing it on 22nd March,
2018. The amendment will shortly come into force after receiving the
President of India’s assent and the same being notified in the official
gazette. This bill has paved the path for doubling the tax-free limit of
gratuity to twenty lakh Rupees as against the existing ceiling of ten lakh Rupees.
was passed by the Lok Sabha on 15th March,
2018 followed by the Rajya Sabha also passing it on 22nd March,
2018. The amendment will shortly come into force after receiving the
President of India’s assent and the same being notified in the official
gazette. This bill has paved the path for doubling the tax-free limit of
gratuity to twenty lakh Rupees as against the existing ceiling of ten lakh Rupees.
The Payment of Gratuity Act allows for payment of
gratuity, as an expression of the gratitude of any employer for five or more
years of continuous service, upon the retirement, superannuation or resignation
of an employee.
gratuity, as an expression of the gratitude of any employer for five or more
years of continuous service, upon the retirement, superannuation or resignation
of an employee.
The Payment of Gratuity Act, 1972 applies to
every factory, mine, oilfield, plantation, port and railway company, shop or establishment in which ten or more
persons are or were employed on any day of the preceding twelve months and
such other establishments or class of establishments in which ten or more
persons are or were employed on any day of the preceding twelve months as the
Central Government may, by notification, specify in this behalf.
every factory, mine, oilfield, plantation, port and railway company, shop or establishment in which ten or more
persons are or were employed on any day of the preceding twelve months and
such other establishments or class of establishments in which ten or more
persons are or were employed on any day of the preceding twelve months as the
Central Government may, by notification, specify in this behalf.
The Act is applicable to all establishments with ten or more employees,
including Not-for-Profit establishments which are covered by the Shops and
Establishments Act
including Not-for-Profit establishments which are covered by the Shops and
Establishments Act
Amount of gratuity is
directly proportionate to the tenure of service, and also to the last drawn
salary. The gratuity is given at the rate of fifteen days of the last drawn
salary for each year of service. The salary that is considered for the
calculation of gratuity is the last drawn salary that includes basic pay and
dearness allowance.
directly proportionate to the tenure of service, and also to the last drawn
salary. The gratuity is given at the rate of fifteen days of the last drawn
salary for each year of service. The salary that is considered for the
calculation of gratuity is the last drawn salary that includes basic pay and
dearness allowance.
With effect from 1st January, 2007, the ceiling for gratuity
payments was raised to ten lakh Rupees. After a gap of a decade, the ceiling
will now be doubled to twenty Lakh Rupees.
payments was raised to ten lakh Rupees. After a gap of a decade, the ceiling
will now be doubled to twenty Lakh Rupees.