There is good news for private sector employees, as the Union cabinet on Thursday March 4, 2010 approved an amendment to the Gratuity Act to raise the ceiling from the present limit of Rs 3.5 lakh to Rs 10 lakh. A government official has informed that the Bill to amend the Act will be presented in Parliament now. Read below the detailed information regarding India raised (move up) Gratuity ceiling from Rs 3.5 lakh to Rs 10 lakh.
The government cleared a proposal to raise the Income Tax (I-T) ceiling for payment of gratuity from Rs 3.5 lakh to Rs 10 lakh in order to give a major relief to salaried class in the private sector. At a cabinet meeting, which was chaired by Prime Minister Manmohan Singh, the pronouncement was made. For central government employees, the Sixth Pay Commission recommendation had lift up the limit. Among both the government and private sector employees, this move will bring parity in enjoying identical gratuity benefits.
Who is eligible?
For half a month’s salary as gratuity for every fulfilled year of service, all salaried people, who has finished five years of government or private sector service is eligible. Every employer with greater than 10 salaried workers is permissible to grant gratuity to the entitled employees. Though, many companies do not keep the gratuity liability effectively funded. It means, they make provisions for future payment, but do not set aside money towards the future payment. It is estimated that listed companies will disclose their gratuity liability.
Mallikarjun Kharge (Labour and Employment Minister) had said before that his Ministry was holding consultations with different stakeholders to turn up at a consensus for raising the ceiling.