Business India

Bill for doubling gratuity cap cleared by Cabinet

The Union Cabinet on Tuesday approved a bill for introduction in Parliament that is aimed at doubling the maximum gratuity limit to Rs 20 lakh for certain categories of employees, at par with central government staff.

The Payment of Gratuity (Amendment) Bill, 2017, aims to increase the maximum gratuity limit for employees in the private sector and in Public Sector Undertakings/autonomous organisations under the government not covered under Central Civil Services (Pension) Rules, at par with central government employees, an official statement said.

The Payment of Gratuity Act, 1972, applies to establishments employing 10 or more persons. The present ceiling on gratuity under the Act is Rs 10 lakh.

With the implementation of the 7th Pay Commission, in case of government servants, the ceiling was raised to Rs 20 lakh.

“Considering inflation and wage increase even in case of employees engaged in private sector, the government is of the view that 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 the Act of 1972,” the statement added.

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