7th Pay Commission: Motive behind increasing tax-free gratuity and more

New Delhi/Bhubaneswar: The Payment of Gratuity (Amendment) Bill was passed by the Lok Sabha on Thursday. The Bill, one passed, will enable the government to fix period of maternity leave and tax-free gratuity amount with an executive order.

Meanwhile, the motive of government behind increasing the tax-free gratuity is an inclusive one.

Moving the bill for passage, Labour Minister Santosh Kumar Gangwar said it is a very important legislation for employees, especially women.

Presently, workers in the formal sector with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving job or at time of superannuation. But the government now wants this to be increased to Rs 20 lakh helping the organised sector workers go at par with the central government.

The bill will now go to the Upper House for consideration and passage.

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After the passage of the Payment of Gratuity (Amendment) Bill in the House of the Elders, the government would be able to enhance the ceiling of tax-free gratuity to Rs 20 lakh from existing Rs 10 lakh for employee under the Payment of Gratuity Act.

After implementation of the seventh Central Pay Commission, the ceiling of gratuity amount for central government employees was increased from Rs 10 lakh to Rs 20 lakh. The unions are demanding for inclusion of the change into the Act, PTI reported.

The bill was passed amid the din in the Lok Sabha on Thursday as uproar over a host of issues went for the second week in a row.

The bill notifies the period of maternity leave as part of continuous service and proposes to empower the central government to notify the gratuity ceiling from time to time without amending the law.