Cabinet approved amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh
The Cabinet on Thursday approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament, a government official told.
Every salaried person, who has completed five years of government or private sector service, is eligible for half a month’s salary as gratuity for every completed year of service. But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh. The proposed amendment raises this to Rs 10 lakh. Every employer with more than ten salaried workers is mandated to provide gratuity to the eligible employees. Many companies, however, do not keep the gratuity liability adequately funded. That is, they make provisions for future payment, but do not set aside funds towards the future payment. Listed companies are expected to disclose their gratuity liability.
Download Payment of Gratuity Amendment Bill 2010
Related Post:-
1. Cabinet approved amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh
2. Lok Sabha passes bill to hike gratuity ceiling to Rs. 10 lakh from Rs. 3.50 Lakh
3. Gratuity Limit increased to 10 Lakh as per Income Tax Act and Gratuity Act in Rajya Sabha
The salaried class after subprime crisis are put to terrible financial loss due to inflation, low interest rates on depoisits, erosion in the value of long term savings, increase in cost of education, health..etc. The effective date for amendment should be from 1.1.2006, so that the retired employees can have a decent burial in case of death.
Hi All,
Recent Gratutity amendments are very unfair.
I recan, we all should come togther and appeal against it.
Drop me a email if you agree.
gratutity@gmail.com
an employee working in a psu
after putting in 36 years retired on
23-05-2010. he gets a maximum of rs
3.5 lakhs only whereas an employee
who is junior to the former by 4to5
yesrs gets10 lakhs without i tax
if he retires on24-05-2010 or afterwards. it is a great anomoly.
it should be rectified by making act
effective from 1.1.2006.one person with same rank and same service should have same gratuity
gazette notification on amendment of gratuity act issued. effective date is 24th may 2010
Everywhere we talk about equality. Then why there is a diffrence between the limits of government and non government employees in respect of gratuity and other benefits and the income tax.
Would sincerely request the Governement to look into this anamoly in the limits for exemption.
GOVERNMENT IS THRIVING PURELY ON THE INCOME RAISED FROM THE PUBLIC. pUBLIC INCLUDE ALL PSU AND PRIVATE SECTOR EMPLOYEES. THEN WHY THIS PARTIAL DECISION BY THE GOVERNMENT OF INDIA? THE GOVERNMENT EMPLOYEES HAVE BEEN GIVEN THE BENEFIT BY AN ADMINISTRATIVE ORDER BY THE STROKE OF PEN. WHEN THE MATTER HAS COME TO THE LEVEL OF APPROVAL BY THE PARLIAMENT AND NOTIFICATION BY THE GOI, THE FINANCE MINISTRY HAS MADE FOUL PLAY? THIS SHOULD BE AMENDED IMMEDIATELY, AS EMPLOYEES IN GOVERNMENT OR PSU OR PRIVATE SECTOR ARE ALL WORKING FOR THE COMMON BENEFIT. THE PARTIAL DECISION SHOULD BE REVIEWED AND JUSTICE RENDERED BY THE FM / PM AND ALL THOSE CONCERNED WITHOUT DELAY. WITHOUT WORK FORCE NO ACTIVITY CAN BE CARRIED ON AND WITHOUT ACTIVITY THERE WILL BE NO CAPITAL FORMATION AND GROWTH OF THE COUNTRY. THIS THE POLITICIANS SHOULD REALISE.
Sir, I have got voluntry retirement from Central Bank of India on 30/09/2008.After 30 year service. I have got gratuity of Rs.3.50lac.Whether enhanced gratuity will be to me. how much will tax free
With pipe line gas prices now increasing, auto/taxi fares also increasing, food items and vege prices increasing even more, how does one expect a comman man to survive. The Govt. says aam aadmi when absolutely nothing is done to relieve them of their pain and suffering. IT benefits have also been passed on to higher wage earners by reducing their tax liability. We have to pay all our taxes in time but when its time for the Govt. to implement any of their pay/gratuity promises, they prefer to take their own time. Please look into our financial woes and implement all your packages including gratuity arrears for the retirees on a war footing.
I retired from the services of Food Corporation of India on 31.3.2010 under CDA pattern. May any one please tell about the payment of gratuity to me i.e. whether the Gratuity would be paid under the amended gratuity act as Rs.10 lac without deduction of Income Tax. On 5.4.2010 I was paid Rs.3.5 lac as Gratuity. Some one told me that the effective date is 1.5.2010. This may also please be colnfirmed.
I also need to know the date of effect of the ammendment for PSU bank employees. please reply.
I retired from the services on 10.05.2010. whether the new gratuity amendment ceiling will apply to me or not. pl. arrange reply to my e mail. and the date of effect of the amendment.
I retired from service in September, 2006 from Food Corporation of India. I was paid gratuity of Rs 3.50 lakhs. How much gratuity will be paid to me
tell me the order so that i can ask my office to give me the rest. Will income tax will be deducted R.C.Khullar
Accounting & Disclosure for Employee Benefits
in Compliance of Accounting Standard (AS) 15 (revised 2005)
———————————
• Accounting Standard (AS) 15 (revised 2005) is issued by the Institute of Chartered Accountants of India and is mandatory in nature (refer to the text of the standard for details).
• The objective of the standard is to prescribed accounting and disclosure for employee benefits. The statement requires an enterprise to recognize:-
o A liability when an employee has provided service in exchange for employee benefits to be paid in the future; and
o An expense when the enterprise consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.
• Employee Benefits fall under 2 type of plans:- Defined Contribution Plans and Defined Benefit Plans.
• Employee Benefits are further classified as:-
o Short Term Employee Benefits
o Post Employment Benefits such as Gratuity, Pension, Other Retirement Benefits, Post-Employment Life Insurance and Post-Employment Medial Care;
o Other Long-Term Employee Benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation; and
o Termination Benefits
Because each category identified above has different characteristics, this statement establishes separate requirements for each category.
• Accounting and Disclosure requirements for Defined Benefit Plans need the skill of an Actuary.
• Most common Defined Benefits relevant in the Indian context which need the services of an actuary for compliance of the accounting standard, whilst finalizing the financial statements are:-
o Gratuity
o Compensated Absences (Earned Leave)
o Compensated Absences (Sick Leave)
o Post Retirement Medical Benefits
o Superannuation (Pension Benefits)
• Frequent items to be conversant with the subject are:-
o Projected Unit Credit Method (PUC)
o Present Value of Obligation
o Current Service Cost
o Interest Cost
o Actuarial Gains/Losses
o Employer’s Expense
o Experience Adjustment on Plan Liabilities
o Experience Adjustment on Plan Assets
• *We provide actuarial services for compliance of the standard. We have expertise, experience and in-depth knowledge in this field. We have a large clientele spread in almost all sectors of the economy in Public and Private Sectors including Multinational Companies, Limited Companies, Schools, Hospitals, Banks, Electricity/Power Companies etc. etc.
• Our services are also available for compliance of :-
o International Accounting Standard IAS (19) – IFRS
o Under US GAAP
Please mention reference of this post to avail benefits/resolution of your queries.
sir, is ther any change in the formula for calculation of gratuity i.e. is there any increase in the no of days per year for calculation of gratuity
thanks
Will the Govt. please publish the enhanced Gratuity Notification at least now as the wait is far too long and the implementation of the same will take time too. We are retired Central Govt. PSU employees and eagerly look forward to some relief at the earliest.
The date of effect for payment of enhanced gratuity in case of Central Govt. employees is 01.01.2006. We presume but please confirm whether the same date of effect will be applicable for PSU Bank employees.
I retired from Punjab National Bank on 31.05.2008 after serving the bank for 37 years. Will the enhanced Gratuity limit of Rs.10 lakh be applicable in my case? Will it be Tax Free.
Gratuity is payable to PNB officers as per their service regulations also. Gratuity under the Act or the Regulations is payable, whichever being higher.
I got Rs.4.25 lakh out of which amount beyond 3.50 lakh was taxable.
If I calculate gratuity under the Act it comes to more than Rs.10 lakh
Respected Sir,
Please let me know this amendment to the gratuity act is eligible to coop banks? If yes than this raised amount is whether taxable or non taxable?
Awaiting for your reply.
Thanking you.
I understand that LOK SABHA has also given approval for enh
ancement of gratuity from 3.5 to 10.00 lacs to Govt. emp including Public Sec banks through a local News paper but date of effect to the issue is not mentioned anywhere. Please confirm if the date of effect has been finally decided by the Labour Ministry from where it is to be finalied. Thanks
Pleased to note that the Parliament has accorded its sanction to raise the Gratuity limit from Rs.3.5 lacs to Rs.10 lacs by passing the amendment bill. While discussion on the amendment bill, one M.P. has aprised the minister to give effect the amendment from 2006 but the Minister of Labour did not agree to it. When the Central Govt.employees are already getting higher gratuity even from 2006, why the Central and State PSUs/Boards who are following the Payment of Gratuity Act should be deprived from availing the enhanced gratuity from 2006? Will the Central Govt.once again reconsider the issue that is to be by and large benefitted the retirees even from the year 2006.
I HAVE RETIRED FROM A NATIONALISED BANK ON 30.09.2009.AM I ELIGIBLE TO RECEIVE Rs.650000/- as remaining amount of gratuity since I recd only 3.50 lacs on my retirement.Is the amendment in Gratuity Act applicable to the bank retirees like me?
I was retired on 30.11.2009 from Bank of India and was paid gratuity as per bank’s rules and the maximum ceiling was rs.3.5 lacs. Please advise me as to from which date the aforesaid amendment in gratuity will be taken into account.
i have retired on 30-9-09 and gratuity of 10 lacs has been paid after deducting tax for above 3.5 lacs of old limit.the effective date may please be given so that refund can be claimed with return.
I retired in May 2009, Will I get enhanced Gratuity.
i retired from PSU Bank in january 2010 Whether i am eligible for enhanced gratuty
I am going to retire on 21.05.2010.from private company.
whether I am eligible to raised limit of gratuty ?From which date this has become effective ?
CBSHRIVASTAVA
Prices are hurting, medical bills keep mounting. Yet, there is no sign of the Gratuity arrears which was recently raised to Rs.10 lakhs being disbursed to the retired employees. We all eagerly look forward to receiving these arrears as we are really hard hit by this type of an inflation which we have never seen before. Please help.
Sir,
Would like to know the effective date of this Amended Gratuity Act, 2010.
Regards,
anita
Please confirms whether the amendments to gratuity Act 1972 has been signed by the President of India.
Also confirm whether amendment is applicable retrospectively from 1.1.2006
Has the Income Tax Exemption Limit increased to 10 Lakhs? I was given to understand that this notification will come after parliament session in April.
dear sir
The gratuity amount payable will be basic or gross salary (15days every year)
Rgds
HI This is sandeep rai,
I have completed 4 year 7 months and 10 days in my company . suppose if i m
leaving the company then what be abt gratuaty.
Thanks
Sandeep
i retired from food corporation of india on 30.06.2009 drawing salary under cda pattern but not paid gratuity enhanced to rs. 10 lakhs by the sixth pay cmmission.let me know the under the recent amendment of gatuity act will ireceive the gatuity as per revised ceiling.
On 4th March 2010 Govt. Cabinet approved an Amendment to the Gratuity Act to raise the Gratuity ceiling amount from Rs.3.5 Lacs to Rs.10 Lacs for Employees working in Private Sector.
When the Bill to Amend the Act will now go to Parliament for approval and notification / Amendment to Gratuity Act and Amendment to Income Tax Law for Tax Excemption of Gratuity Amount upto Rs.10 Lacs.
Will this be done With Effect From 1st April 2010. Please confirm.
To, all concerned,
Govt should ammend ceiling by ordinance immidietly.
The Sixth Pay Commission had given recommendations for Central Govt. employees, which were accepted in toto by many statutory bodies (quasi-govt.) under different ministries of Govt. of India. However, on enhanced gratuity the Income tax exemption limit has not been implemented by some of the statutory bodies like Bureau of Indian Standards (BIS) and they have deducted TDS even on this retirement benefit.
To protect the genuine interests of such employees, Ministry of Finance should issue a notification, which allows refund of TDS so deducted in the next Income tax return. Immediate action needs to be taken.
Dear all
Pls note that this amendment approved only by cabinet , now parliament will pass and then the president will give her assent then it become part of the act .
So you all wait till its notification issued by central govt.
Further it is most important that whether govt will give this amendment effect retrospective or prospective . if retrospective then govt will notified the date from this amendment will enforce . so i request all of you wait till notification of date if you all come under this date then will entitled for benift . If govt notified from prospective date then retired employees will not get benifit . So Imp is the date ?
THANKS
With Best compliments
MAHESH PAREEK
Dear sir,
I retired from a statutory corporation created under act of parliament. we are covered under DCRG Rules for gratuity purpose.We do not get pension.We are covered under the 6CPC.our gratuity amount was enhanced from 3.5 lakhs to 10 lakhs. while paying our gratuity arrears tax was deducted for the excess amount.on the plea that we are not Cent Govt or State Govt orgns. In view of the increase now made by GOI can i seek refund of tax paid on gratuity in my tax returns for AY2010-11.I received the Gratuity amount in FY2001-10.Pl advise.
thanks
S.Bhanusekhar
The pay revision of Central PSUs has been made effective from 1-1-2007 which included gratuity upto the enhanced limit of 10 lakhs. Many PSus have already paid the gratuity but after deducting Income Tax for the amount in excess of the old limit of Rs.3.5 lakhs. When gratuity upto Rs.10 lakhs becomes taxfree, will these retired employees get the Income Tax refunded to them?
dear sir,
i am retired on 10-04-2008 from Hindustan Zinc Ltd,.what recently announced the govt of India gratuity payment enhance from 3.50 to 10 lac. it is applicable me are not and what is the back date. please be reply.
regards,
kanakeswara rao.s
DEAR SIR,
I WAS WORKING IN A LARGE PVT FACTORY FOR 34 YEARS. I HAVE RETIRED ON FEBRUARY 2009. I HAVE GOT RS 3-50 LACS AS GRATUITY. AM I ELIGIBLE FOR BALANCE 6.50 LACS
AS PER THE CABINET APPROVED AMENDMENT OF PAYMENT OF GRATUITY ACT 1972 ,AMENDED ON 5-3-2010 FOR RS 10.00 LACS.
PLEASE CONFIRM TO MY E MAIL ID.
THANKS , M.B.POONACHA.
I retired from Govt.formed Agency recently in Jan.2010. May you please guide me if I would be eligible for a higher amount of gratuity payment over Rs.3.5 lakhs (paid Rs.3.5 lakhs) under this revised amendment? or any other amendment to this rule?
What if any employer ( Pvt Ltd Co) do not provide & do not pay Gratuity to any employee?
There definitely has to be an amendment in the Income Tax Act and the Rules to allow the upper limit of the amended gratuity under the Payment of Gratuity Act, 1972 as exempt from tax else the enhancement of eligibility will, in many cases, not be attractive at all.
Sir
Greetings.
I took pre – mature retirement from SBI in August 2008 and was paid gratuity of Rs. 3.50 lakhs. May you please guide me if I would be eligible for a higher amount under this or any other amendment to the rules.
Thanks & Warm Regards.
D C Binjola
Dear sir,
Happy to read the news about the
Cabinet decision regaarding the
ceiling of gratuity exemption from Rs.3.5 Lakh to Rs.10 Lakh.
It will be really very helpful to the employees of Private Sector
like me.
Regds
All India Documentation Manager.
CSAV Group Agencies India P.Ltd.
will the 10 lakh of gratuity amount be taxa free now?
now the ceiling for gratuity is being raised from 3.5 laks to 10 laks, will it be taxfree income or taxable?
Dear Sir,
We are very happy to note the action initiated by GOVT to amend Gratuity Act.
As we already stated our geniune complaint, GOVT is not considering the grievances of DEFENCE Public Sector Employees with CDA payment terms who are Retired from services after 01/01/2006.These PSUs (69 in nos. ) have implemented pay revision as per 6th PAY COMMISSION, but not ENHENCED Gratuity as Recommended by 6th HPPC Report.
You may see that one of the PSUS following CDA payment to their Employees ,like — Nuclear Power Corporation Of India Ltd has already implimented Enhencement Of Gratuity i.s. upto Rs 10 /- Lakhs with effect from 01/01/2006 to their Employees.
Then , why defence dept is not advising the PSUs under their control to impliment the Recommendation of Enhencement of Gratuity from Rs 3/- Lakhs to Rs 10/- Lakhs.
Retired Additional General Manager , Mazagon Dock Ltd, Mumbai 400010
Dear Sir,
We are very happy to note the action initiated by GOVT to amend Gratuity Act.
As we already stated our geniune complaint, GOVT is not considering the grievances of DEFENCE Public Sector Employees with CDA payment terms who are Retired from services after 01/01/2006.These PSUs (69 in nos. ) have implemented pay revision as per 6th PAY COMMISSION, but not ENHENCED Gratuity as Recommended by 6th HPPC Report.
You may see that one of the PSUS following CDA payment to their Employees ,like — Nuclear Power Corporation Of India Ltd has already implimented Enhencement Of Gratuity i.s. upto Rs 10 /- Lakhs with effect from 01/01/2006 to their Employees.
Then , why defence dept is not advising the PSUs under their control to impliment the Recommendation of Enhencement of Gratuity from Rs 3/- Lakhs to Rs 10/- Lakhs.
Why the Depts Of Govt Of India treat all Employees of PSUs having CDA payment terms are alike?
Retired Additional General Manager , Mazagon Dock Ltd, Mumbai 400010