Enhancement in gratuity from 1st Jan-16 (Bankers are also entitled)

“The bill to amend the Payment of Gratuity Act has been considered and approved by the Union Cabinet in its meeting After the amendment in the Act, formal sector workers would be eligible for up to Rs. 20 lakh tax-free gratuity. Last month, the central trade unions had agreed on the proposal in a tripartite consultation with the Labour Ministry.

  1. While there should be no ceiling for Gratuity, as an interim measure, Government’s proposal to increase in the ceiling of Rs. 20 lacs has been accepted.
  2. The revised ceiling would be made effective from January 2016.
  3. Minimum service of 5 years for eligibility for Gratuity will be removed.
  4. Gratuity to be paid at 30 days wage per year instead of 15 days wage as at present.


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