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      Amendments In Payment Of Gratuity Act: Proposed

      Sunday, February 26th, 2017 Amritesh 24 responses

      Gratuity Payment Act is expected to be amended soon. In the recently concluded tripartite meeting it has been decided that the Tax Free Gratuity limit to be enhanced to Rs 20 lakhs from Rs 10 lakhs to bring it at par with the Government employees who enjoy similar benefits as per the recommendations of the 7th Pay Commission. Official Notification on the same is expected soon.

      The recommendation to increase the Tax Free Gratuity to Rs 20 lakhs has been agreed upon by the Labour Ministry and the Central Unions. The move will benefit Individuals employed in the private sectors. Along with it, host of other reforms were also suggested to the Ministry of Labour by the Central Unions which are discussed below. It has also been proposed to make the amendment applicable from 1st January, 2016 in line with the norms set for Government employees.

      Gratuity Act,1972

      Benefits Calculation Under Gratuity Act

      Demands raised/proposed by the Labour Unions to the Labour Ministry:

      Changes in Rates of Gratuity Calculation

      The Labour Unions have called for changes in the wage rates for calculation of Gratuity. It has been recommended to replace the 15 days wage period with 30 days for the calculation of Gratuity. The recommendation, if implemented will double your Gratuity Benefits.

      Changes in Applicability of the Act

      Labour Unions have also suggested for the removal of minimum of 10 employees clause for applicability of the Act in Establishments. Thus more Individuals could be covered under the Act and will be eligible receive the Benefits prescribed as per the Act.

      Changes in Eligibility Norms Under the Act

      Recommendations have also been made to do away with 5 years service clause to be eligible for the Gratuity. This would benefit employees who are looking to switch jobs after serving for short tenure. Proposal also has been made to bring down the service period to 3 years and include provision to transfer gratuity benefits when an employee switches jobs.

      The above recommendations are aimed at bringing the employees in Formal Sector at par with Government employees along with improvement in the present Benefit structure for the employees.

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      Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.
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      24 Comments on "Amendments In Payment Of Gratuity Act: Proposed"

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      BHASKAR
      Guest

      Kindly share the notification please

      Kishore d
      Guest

      Thanks , but from when this act is applicabe or expected to be applicable

      Rajeshwar Joshi
      Guest

      Sir I am banker working in SBI as SR. Manager . Previous known as SBP . I have 44 months service. Due VRS option I am little bit confused on pension issue and gratuity issue? As I want to know ceiling of gratuity as on date. to decide for. VRS. Pension at SBP is 50% and in SBI it’s 40% . So gratuity implementation date will help to decide me for VRS. Pls advise in matter if possible.

      Thirumala Rao Chakiri
      Guest
      Thirumala Rao Chakiri

      Can the employees of banks will be eligible Rs 20.00 lack gratuity.

      T V RAMANA RAO
      Guest

      thank you for the analysis sri amritesh.

      Arun Kumar Bajpai
      Guest

      Useful information.

      Arun Kumar Bajpai
      Guest

      would you please tell me what amount of pension i will receive after supreme court ruling for epfo pension

      Arun Kumar Bajpai
      Guest

      at present i am getting pension of Rs. 2589/- p.m.

      R.N Wakhloo
      Guest

      Please let me know when this amendment will be brought out and made applicable.

      ashok s mam
      Guest

      WHY IS THIS AMENDMENT GETTING DELAYED INCREASE OF LIMIT TO 20 LAC IN GRATUITY

      Trushanti
      Guest

      Hi,
      Can you tell me till when this amendment will come?
      I am leaving this organization in next month and I am not getting gratuity because there are 10 days less to complete 5 years.

      manjunath Ratnakar
      Guest

      when it is going to be implemented for bankers and with what date. Advise present status

      Gautam Chatterjee
      Guest

      Changes in Rates of Gratuity Calculation

      The Labour Unions have called for changes in the wage rates for calculation of Gratuity. It has been recommended to replace the 15 days wage period with 30 days for the calculation of Gratuity. The recommendation, if implemented will double your Gratuity Benefits.————- What is the status of the above demand. Is it approved? or Not yet.

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