The amendment proposed by cabinet will increase the maximum limit of gratuity for government employees from Rs.10.00 lac to Rs.20 lacs and also revise the ceiling for employees in the private sector, in PSU / autonomous organisations under the government who are not covered under CCS(pension) rules, at par with the central government employees.
Before the implementation of the 7th Central Pay Commission, the ceiling under CCS (pension) rules 1972 was Rs.10.lacs. However with the implementation of 7th Central Pay Commission , in case of government servants , the ceiling now is Rs.20 lacs effective from 1.1.2016
Now the process of increasing the ceiling has been initiated and we have to wait till it is passed by the Parliament and it becomes an act .
Details of the bill is not yet clear and hence it is not crystal clear whether the proposed amendment will be w.e.f. 01.01.2016 or it will be from a later date .We are not yet clear whether tax exemption limit will also be increased simultaneously .Let us however remain positive till its final picture emerges.
Economic Times news writes following line
The Centre today approved an amendment bill that seeks to double tax-free gratuity for formal sector employees to Rs 20 lakh.
In addition to it , GOI cleared a 1% increase in Dearness Allowance to central government employees and pensioners . The government increased Dearness Allowance and Dearness Relief to 5% from 4%, which will benefit around 49.26 lakh central government employees and 61.17 lakh pensioners.
Link To Hindustan Times
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Cabinet approves introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament
Accordingly, the government initiated the process for amendment to the Payment of Gratuity Act, 1972, which 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 it is because of rules of superannuation, or physical disablement or impairment of vital parts of the body. Therefore, the Gratuity Act serves as a key social security legislation to wage earners in industries, factories and establishments