Tax free Rs 20 lakh gratuity for employees to be a reality
soon
At present formal sector workers with five or more years of
service are eligible for Rs 10 lakh tax-free gratuity after leaving their job
or at time of superannuation.
Payment of Gratuity Amendment Bill 2017 is likely to be
passed in the forthcoming Budget session, which will make formal sector workers
eligible for tax-free Rs 20 lakh gratuity.
At present formal sector workers with five or more years of
service are eligible for Rs 10 lakh tax-free gratuity after leaving their job
or at time of superannuation.
"The Payment of Gratuity (Amendment) Bill, 2017 will be
passed in the Budget session of Parliament, expected to begin by the end of
this month," a source said.
The source further said, "The government wants to
provide tax-free gratuity of Rs 20 lakh to organised sector workers at par with
Central government".
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The bill was introduced in the Lok Sabha in the winter
session of Parliament last month. Once the bill is passed by Parliament, the
government will not be required to go to it again for deciding the quantum of
tax-free gratuity.
The bill seeks to allow the government to notify the period
of maternity leave and gratuity that can be availed by employees under a
central law.
The Payment of Gratuity (Amendment) Bill, 2017 was
introduced by labour minister Santosh Kumar Gangwar in the Lok Sabha on
December 18, 2017.
The Payment of Gratuity Act, 1972, was enacted to provide
for gratuity payment to employees engaged in factories, mines, oilfields,
plantations, ports, railway companies, shops or other establishments.
The law is applicable to employees, who have completed at
least five years of continuous service in an establishment that has ten or more
persons.
The amendment will also allow the central government to
notify the maternity leave period for "female employees as deemed to be in
continuous service in place of existing twelve weeks".
The proposal comes against the backdrop of the Maternity
Benefit (Amendment) Act, 2017 enhancing the maximum maternity leave period to
26 weeks.
With respect to gratuity, the amount is calculated on the
basis of a formula which is 15 days of wages for each year of completed
services, subject to the ceiling of Rs 10 lakh. This limit was fixed in 2010.
After implementation of the 7th Central Pay Commission, the
ceiling of gratuity amount for central government employees has been increased
from Rs 10 lakh to Rs 20 lakh.
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