The Central Government, on Thursday, notified the tax-free gratuity has been raised from Rs. Ten lakhs to Rs. Twenty lakhs for private sector employees by following the changes in gratuity Act though the government could easily fix the ceiling of the retirement benefit through an executive order.
This is in the light of inflation and wage increase even in case of employees engaged in the private sector.
The amendment bill was approved by the Parliament in the earlier month. Besides, the bill amended by parliament also sought to enable the central government to change the ceiling for tax-free gratuity after factoring rise in income levels by an executive order bypassing Parliament route to amend the law.
After the implementation of the 7th Central Pay Commission, the ceiling of tax-free gratuity amount for the central government employees was increased from Rs. 10 lakh to Rs. 20 lakh. The unions have been demanding for the inclusion of the change in the Payment of Gratuity Act.
The approved amendment bill had empowered the Government to fix the period of maternity leave. Presently the Central Government has fixed the total period of maternity leave to twenty-six months in the case of a female employee. This would be a major relief to the women employees.
The Payment of Gratuity Act, an important social security legislation, was passed by the Indian Parliament on 21 August 1972 with the intention of helping an employee monetarily after his retirement. The Act provides for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.
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.
