Cheer For Employees As Modi Government Amends Gratuity Act To Remove Rs 10 Lakh Ceiling

A private company office in Bengaluru. (Hemant Mishra/Mint via Getty Images)

The Rajya Sabha on Thursday approved an amendment to the Payment of Gratuity (Amendment) Bill, 2018, that will empower the government to fix the quantum of tax free gratuity, and the period of maternity leave through an executive order, Mint has reported.

Moving forward this will save the government from going through the rigmarole of parliamentary process to make changes to the act. The bill moved by Labour Minister Santosh Kumar Gangwar was passed through a voice vote. The Lok Sabha had cleared the bill last week.

The limit on tax-free gratuity payment for private sector employees has also been doubled from Rs 10 lakh to Rs 20 lakh. This will provide them parity with central government employees. After the implementation of the 7th Pay Commission, the gratuity ceiling for the central government employees doubled to Rs 20 lakh.

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Another amendment to the bill also allowed the government to raise the maternity period eligible as continuous period of service for gratuity purposes from 12 weeks to such period as may be notified from time to time.

The Modi government had earlier amended the Maternity Benefit Act of 1961 to raise maximum paid maternity leave from 12 weeks to 26 weeks.

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