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.

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  1. Eswaran Chinnappan
    Jan 15, 2018 at 4:02 pm
    The decision of the Central govt. to enhance the terminal social security benefit of Gratuity to Rs. 20 lakh from Rs.10 lakh is very much a welcome and an appreciable move though a quite overdue and delayed one. This provision will be very much helpful to the retired towards the end of their eventful life. As was done for the direct Central government employees and without any discrimination to others, the enhancement for PSUs/Private sector should also be emphatically effective from 01.01.2016. The Indian Public/Voters will be very much adoring our PM shri.Narendra Modiji and acknowledging this good gesture during the crucial parliamentary election year of 2019. The implementation should be at the earliest so that the beneficiaries get timely help for them as well as their dependents when they need it most. This will also be remembered and the gra ude exhibited by their family members through their votes in 2019. Implementation shall be wef 01.01.2016 only not later this.
    Reply
    1. Eswaran Chinnappan
      Jan 15, 2018 at 3:03 pm
      The recent decision of the government of India for enhancing the gratuity amount to Rs. 20 lakh from Rs. 10 lakh is very much a welcome move though a quite overdue and delayed one. This terminal social security benefit provision will be very much appreciated and helpful to the retired people towards the end of their eventful life. As was done for the direct Central government employees, the enhancement for PSUs/Private sector should also be emphatically effective from 01.01.2016. The Indian Public/Voters will be very much adoring our PM shri.Narendra Modiji and acknowledging this good gesture of the Central government during the crucial year of 2019 when the Parliament election will be held. The implementation should be at the earliest so that the positive impact of this benevolent and people-centric welfare act will be very much lingering for long in the minds of the family members of the beneficiaries, who will definitely exhibit their gra ude through their vote bank in 2019.
      Reply
      1. D
        Deepak kumar bhargava
        Dec 19, 2017 at 6:38 pm
        I am retiring from life insurance corporation of india on 31/12/17 Will I get the gratuity benefits
        Reply
        1. Avadhani Bhuvanagiri
          Dec 14, 2017 at 9:15 pm
          THE DATE ENHANCEMENT SHOULD BE FROM 01.01.2016 TO THE PRIVATE SECTOR EMPLOYEES ALSO
          Reply
          1. R
            Rajeev Jha
            Dec 8, 2017 at 2:39 pm
            will it be effective from retrospective date -say wef 1st Sept 2017
            Reply
            1. R
              Rajeev Jha
              Dec 8, 2017 at 2:37 pm
              will it be effective from the same date 1.1.2016 as for Govt Employees ??
              Reply
              1. S
                Sudeep Kumar Srivastava
                Nov 28, 2017 at 4:02 pm
                Sir, employees of Central Govt. and Central Govt. Public sector undertakings were given enhanced Gratuity from Rs. 10.00 lacs to Rs. 20.00 lacs from 01/01/2016. Employees of Central Govt. public sector Banks were also be given enhanced Gratuity of Rs. 20.00 lacs from 01/01/2016, the date on which it was given to Employees of Central Govt./Public sector undertakings otherwise it will be discrimination to Central Govt. public sector Banks. Gratuity is given by enactment of Parliament and is not a matter of Bi par e settlement.So effective date should be from 01/01/2016
                Reply
                1. Rajiv Rockx
                  Dec 20, 2017 at 2:08 am
                  sir it will be bipar e.. but the date of commencement of the act will be after president's signature and the after the release on the gazatte of india. so keep patience if you have already retaired then you will hardly receive the excess gratuity.
                  Reply
                  1. T
                    T.C.Arora
                    Jan 11, 2018 at 2:18 pm
                    Sir, It is not clear why Government is delaying issue of notification for granting enhanced gratuity payment to PSU private sector employees? The date of enhancement, as applicable to Govt. employees i.e. 1.1.2016 - the same formula should be there for other sector employees.
                    Reply
                  2. S
                    Sudeep Kumar Srivastava
                    Nov 28, 2017 at 3:27 pm
                    Sir, enhanced Gratuity amount from Rs. 10.00 lacs to Rs.20.00 lacs was given to Central Govt. employees and employees of public sector undertakings from 01/01/2016. Employees of Central govt. public sector banks were also be given enhanced Gratuity from Rs. 10.00 lacs to Rs. 20.00 lacs from 01/01/2016. If it will not be given from the date 01/01/2016 so it will be discrimination to the employees of Central Govt. Public sector Banks. Most of the State Govt. has also given enhanced Gratuity from Rs. 10.00 lacs to Rs. 20.00 lacs from 01/01/2016 to there employees. So enhanced gratuity of Rs. 10.00 lacs to Rs. 20.00 lacs should also be given to Central Govt. Public Sector banks employees from 01/01/2016.
                    Reply
                    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
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