1. Payment of Gratuity (Amendment) Bill, 2017: PM Modi Cabinet gives nod; will also revise gratuity ceiling of private employees

Payment of Gratuity (Amendment) Bill, 2017: PM Modi Cabinet gives nod; will also revise gratuity ceiling of private employees

With implementation of the 7th Central Pay Commission, the gratuity ceiling for government servants got revised, from Rs 10 lakh to Rs 20 lakh. The amendment seeks to revise the ceiling for employees in the private sector too.

By: | Updated: September 12, 2017 6:22 PM
introduction of Payment of Gratuity (Amendment) Bill 2017 approved, revise gratuity ceiling of private employees, Union Cabinet, Narendra Modi The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons.

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday gave its approval for introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament. With implementation of the 7th Central Pay Commission, the gratuity ceiling for government servants got revised, from Rs 10 lakh to Rs 20 lakh. The Amendment seeks to revise the ceiling for employees in the private sector too, considering inflation and wage increase. Thus, the Amendment will increase the maximum limit of gratuity of employees, in the private sector and in public sector undertakings/ autonomous organizations under the government who are not covered under CCS (Pension) Rules, at par with the Central government employees.

It may be noted that the Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is a result of the rules of superannuation, or physical disablement or impairment of vital part of the body. Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation to wage earning population in industries, factories and establishments.

The present upper ceiling on gratuity amount under the Act is Rs 10 lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also similar. Before implementation of the 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 was Rs 10 lakh. However, with implementation of the 7th Central Pay Commission, in case of government servants, the ceiling now is Rs 20 lakh, effective from 1.1.2016.

Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, the government is of the view that the entitlement of gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972. Accordingly, the government initiated the process for amendment to Payment of Gratuity Act, 1972.

  1. Deep Narayan Pandey
    Nov 22, 2017 at 3:01 pm
    What is the new limit of gratuity for pvt sectors
    Reply
    1. D
      DB
      Nov 21, 2017 at 4:23 pm
      I was compulsorily made to retire on Nov 30, 1996, what will I be eligible for, we get quarterly repeat quarterly only Rs 2000/- (Rupees two thousand only) in private sector
      Reply
      1. J
        JAIPAL KANDAV
        Nov 16, 2017 at 8:17 pm
        I was retired on 30 June 2016 after serving 33 years in a private firm. I got Rs. 10 lakhs gratuity. can I eligible for balance gratuity. I am aware that the bill has been passed in the Parliament. I have two questions 1. When the gazette notification will be issued ? 2. Am I eligible for Rs.20 lakhs gratuity since the Parliament has passed the bill.
        Reply
        1. V
          V Srinivasan
          Nov 15, 2017 at 4:03 pm
          I understand that the limit of Rs.20 lakhs approved by the Cabinet is to get the amount with tax deduction and if the gratuity is more than Rs.20 lakhs, the balance will also be paid by the employer after deducting tax. Is my understanding is correct. Please confirm.
          Reply
          1. D
            Dinesh Patel
            Nov 11, 2017 at 12:24 pm
            Its a good announcement but i want to know the basis of calculation please confirm by return email id
            Reply
            1. V
              V Srinivasan
              Nov 11, 2017 at 10:40 am
              I am retiring on 31st Dec 2017 after serving 28 years in a private firm. I am aware that the bill has been passed in the Parliament. I have two questions 1. When the gazette notification will be issued ? 2. Am I eligible for Rs.20 lakhs gratuity since the Parliament has passed the bill
              Reply
              1. Y
                Yogesh HK
                Nov 3, 2017 at 5:26 pm
                Though the parliament has passed this bill, still the gazette notification is not out and private sector companies are sticking to the old rule of Rs.10 Lakh. Can you please let me know when this new gazette notification will be out?
                Reply
                1. SKLEGAL SKLEGAL
                  Nov 3, 2017 at 11:22 am
                  whether a retird employee who has already received full gratuity of his service in the government department is further en led for gratuity for the service in private ins ute .
                  Reply
                  1. S
                    SUBRATA BAGCHI
                    Oct 29, 2017 at 12:42 pm
                    I have retired on 31-10-2017 from S A I L , a P S U and my ry Basic D.A Rs 1,65,000 /- When how much Gratuity can I expect ? Awaiting reply through e-mail ID
                    Reply
                    1. S
                      shakti Nandan
                      Nov 5, 2017 at 3:53 pm
                      The enhanced ceiling is applicable from the date of amendment in the parliament. It is unlikely to have any retrospective effect. So you should not expect any additional amount.
                      Reply
                    2. P
                      p k pal
                      Oct 26, 2017 at 10:48 am
                      I am working for a private organisation for 28 years.I have reached to superannuation on dated 31/10/2017. The gratuity act is changed and as per the new amendment bill 2017 the gratuity ceiling has been increased from 10 lac to 20 lac effective 1.1.2016 .As per the amended act I am eligible for 20 lakh ceilling.can I get this benifit?
                      Reply
                      1. S
                        shakti Nandan
                        Nov 5, 2017 at 3:56 pm
                        The enhanced ceiling is applicable from the date of amendment in the parliament. It is unlikely to have any retrospective effect. So you should not expect any additional amount.
                        Reply
                      2. N
                        Nitin Kotian
                        Oct 23, 2017 at 12:24 pm
                        i worked for a private organisation for 34 years and took premature retirement on May 30th 2016.As per the prevailing act at that time I was eligible for gratuity amount of Rs 10 lac which was credited to my account. I understand that the Gratuity act is changed and as per the new amendment bill 2017 the gratuity ceiling has been increased from 10 lac to 20 lac effective 1.1.2016 .As per the amended act am I eligible for the difference in gratuity to the paid to me by my employer. Please note that I was working for a Private organisation is this Amendment also available for Private organisation or only for Govt. servant.
                        Reply
                        1. S
                          shakti Nandan
                          Nov 5, 2017 at 4:03 pm
                          Amendment is yet to come. Amendment would be effective from date of passing the same in Parliament (unlikely retrospective). Shakti Nandan
                          Reply
                        2. D
                          Debajyoti
                          Oct 23, 2017 at 10:44 am
                          Can the Gratuity Amendment Bill 2017 be made effective in retrospect i. e. 01/01/2016 ? In case it is so, then there must be a specific provision for such effect... will the same be followed for PSUs Private sector employees also ? Will it be mandatory for them to follow?
                          Reply
                          1. S
                            shakti Nandan
                            Nov 5, 2017 at 4:08 pm
                            It is unlikely to have an retrospective effect. Though some of the Union are demanding the same. Any employer can pay any amount of gratuity. There is no bar on it. If any special provision regarding effective clause on amendment exist tan our organisation is bound to pay the same. Shakti Nandan
                            Reply
                          2. P
                            PRODIP CHANDRA KALITA
                            Oct 19, 2017 at 1:18 pm
                            As the central goverment employees will receive enhance gratuity (twenty lakhs) from 01.01.2016, the government should consider the same efeective date for the PSU, other govenment undertaking organisations also. Govenrment must kind enough considering inflation and decrease in interest rate in banks, We have already paid a huge amount of taxes during our services. This is for the kind information and consideration from our finanace minister and honerable Prime minister.
                            Reply
                            1. V
                              vinayagamoorthi
                              Sep 26, 2017 at 3:07 pm
                              Rs 20 lakhs Gratuity is applicable for Public Sector Employees from 01.01.2016.Please Confirm.
                              Reply
                              1. S
                                shakti Nandan
                                Nov 5, 2017 at 4:10 pm
                                NO
                                Reply
                              2. G
                                Gulshan gupta
                                Sep 18, 2017 at 8:25 pm
                                Has the CC approved it to be implemented weg 01.01 .16. what are the other features of the amendment other than raising the monetary limit because if other things remain same then nothing will benifited. It is also uncertain when is it going to implement either by ordinance or through parliament in next session.
                                Reply
                                1. V
                                  Venkataramanan
                                  Sep 16, 2017 at 10:49 pm
                                  Implementation will be from 01 01 2016 as per sanction to Govt employees.
                                  Reply
                                  1. V
                                    VenkataramananR
                                    Sep 16, 2017 at 10:23 pm
                                    It should be implemented wed 01012016 as given to govt employees.
                                    Reply
                                    1. B
                                      BHOOTRA
                                      Sep 15, 2017 at 11:08 am
                                      Gratuity amendment from which date for Bankers (PSU)
                                      Reply
                                      1. V
                                        VELAGA SUBRAHMANYAM
                                        Oct 2, 2017 at 9:17 am
                                        IT IS TO BE DECIDED BY SPECIAL INCLUSION UNDER NEGOTIABLE INSTRUMENTS ACT BY THE FINANCE MINISTRY AFTER BEING APPROVED BY THE PARLIAMENT. IT IS LIKELY BE APPROVED IN THE NEXT PARLIAMENT SESSION. LET US HOPE FOR THE BEST. WITH REGARDS
                                        Reply
                                      2. R
                                        richa
                                        Sep 15, 2017 at 11:04 am
                                        NOTIFIcation to bhejo
                                        Reply
                                        1. H
                                          H R Sheshadri Dixit
                                          Sep 14, 2017 at 6:00 pm
                                          When this bill will be placed in the Parliament for approval ?After that it has to be signed by the President .So what should be actual date of implementation and from which day it will be effective for Public Sector employees. I am retired from service on 30th July 2017 this year as a Public sector employee is there any possibility to get the advantage of this change.Kindly let me know the date of implementation of 20 Lakhs gratuity to Public sector employees because I retired from service on 31/07/2017 Kindly replay. thanking you.
                                          Reply
                                          1. N
                                            natarajan
                                            Sep 15, 2017 at 6:35 am
                                            I am Natarajan Seetharaman, retired from a PSE 20 years back and fought for implementation from the same date on which Government servant got the benefit. Based on my suggestion in PMO's grievance cell in December, 2016 this decision had been taken by the Government. The amendment brings the revision of the ceiling under the rule making powers of the government, so that it can be given retrospective effect from the date of revision to government employees Earlier as it as under the act, it was given only prospective effect, with a time gap of 3 to four years. I had also suggested for revision on annual basis, instead of once in ten years. You can therefore hope that the date of revision would be the same i.e january 1st 2016 and derive the benefit.
                                            Reply
                                          2. D
                                            Debabrata Choudhury
                                            Sep 14, 2017 at 4:36 pm
                                            Dear Sir/ Madam, I am not clear about days 15 or 26 per year???? could you please inform me???
                                            Reply
                                            1. sethuraman vajravadivelu
                                              Sep 14, 2017 at 7:45 pm
                                              You get 15 days ry ( basic DA) pay per no of serving years as gratuity. ie, per day ry is your monthly ry(Basic DA) divided by 26. Gratuity monthly ry(basic DA) /26 X 15 days X no of years of service. Hope this clarifies
                                              Reply
                                              1. sethuraman vajravadivelu
                                                Sep 14, 2017 at 7:46 pm
                                                You get 15 days ry ( basic DA) pay per no of serving years as gratuity. ie, per day ry is your monthly ry(Basic DA) divided by 26. Gratuity monthly ry(basic DA) /26 X 15 days X no of years of service. Hope this clarifies
                                              2. S
                                                shakti Nandan
                                                Nov 5, 2017 at 4:25 pm
                                                Yes. While calculating gratuity payable, at present you take working days as 26 whereas you are paid ry for a month taking it as 30 days. So after taking one months ry, you multiply the same with 30 and divide it by 26. after getting the same it is again multiplied by no.of years served. IN case of 15 days (if implemented), it would be divided by 15. Taking the monthly working days as 15. Consequentially, gratuity payable would be approx.1,73 times. Of course within the ceiling.
                                                Reply
                                                1. Deep Narayan Pandey
                                                  Nov 22, 2017 at 2:56 pm
                                                  What is the limit of gratuity in pvt sector
                                                  Reply
                                                  1. Deep Narayan Pandey
                                                    Nov 22, 2017 at 2:59 pm
                                                    What is the new limit of gratuity for pvt sectors DN Pandey
                                                    Reply
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