Union Government Approved Gratuity Limit 20 Lakhs Notification
The union government approved gratuity limit 20 lakhs notification. The government initiated this process to make an amendment of payment of gratuity act 1972 to benefit the large employee base. The payment of the gratuity amendment bill 2017 will increase the maximum limit of the gratuity of employees, in the private sector and public sector undertakings / autonomous organizations under the government who have not covered under Central Civil Service (CCS) pension rules, at par with central government employees.
The main aim of the gratuity act 1972 is to provide social security to the employees after their retirement and this recent amendment will bring more benefits to the employees. Along with employee provident fund act 1952, the payment of gratuity act 1972 is one of the best retirement benefits scheme for employees after their retirement.
Important Points In Gratuity Limit 20 Lakhs Notification
Till now the nontaxability gratuity limit for private sector employees is 10 lakh rupees, but as per this latest gratuity limit 20 lakhs notification, the gratuity limit for private sector employees is increased to 20 lakhs. In case of government sector employees, this limit is fixed to 20 lakhs.
This act is applicable to all the establishments which have employed 10 or more than 10 employees.
The minimum service period to get gratuity amount is 5 years of service, in some cases like permanent disablement or death of the member, the employee or nominee will get gratuity amount even less than 5 years also.
The basic formula to calculate the gratuity amount is (basic salay/26) X 15 X No.Of. Years Of Service.
The latest changes made as per gratuity amendment bill 2017 will be effective from 1 January 2016.
But when comes to reality this amendment will be more beneficial to the high salaried employees only, Do share your opinions and doubts on gratuity limit 20 lakhs notification.
Union Government Approves Gratuity Limit of 20 Lakhs
The Union Government has approved a gratuity limit of 20 lakhs for employees in the private sector. This notification was issued by the Ministry of Labour and Employment on Wednesday, April 15th, 2020.
The notification states that the gratuity limit for employees in the private sector has been increased from 10 lakhs to 20 lakhs. This increase is applicable to all employees who have completed five years of continuous service with the same employer.
The notification also states that the gratuity amount will be calculated based on the last drawn salary of the employee. The gratuity amount will be calculated at the rate of 15 days salary for each completed year of service or part thereof in excess of six months.
The notification also states that the gratuity amount will be paid to the employee within 30 days of the termination of employment. In case of death of the employee, the gratuity amount will be paid to the nominee or legal heir of the employee.
The notification also states that the gratuity amount will be exempt from tax up to a limit of 20 lakhs. This limit was previously 10 lakhs.
The notification is a welcome move for employees in the private sector as it will provide them with financial security in case of termination of employment or death.