Cabinet nod likely to double gratuity cap to Rs 20
lakh
Besides, the bill seeks to 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.
The
Union Cabinet is likely to consider tomorrow a draft
amendment bill
which seeks to double the ceiling of tax-free gratuity to Rs
20 lakh
under the Payment of Gratuity Act.
Besides, the bill seeks to
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.
"The bill to amend
the Payment of Gratuity Act is likely to be considered and
approved by
the Union Cabinet in its meeting scheduled tomorrow," a source
said.
After
the amendment in the Act, formal sector workers would be
eligible for
up to Rs 20 lakh tax-free gratuity. Last month, 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.
Source:
Money Control
