Govt raises ceiling on tax-free gratuity from Rs10 lakh to Rs20 lakh
02 April 2018
The government has doubled the ceiling on tax-free gratuity from Rs10 lakh to Rs20 lakh from the new financial year, offering a big relief to employees in the private sector as well.
Formal sector workers with five or more years of service are eligible for Rs10 lakh tax-free gratuity after leaving a job or at the time of superannuation.
Numerous unions have been demanding a hike in the Payment of Gratuity Act for long.
However, much to the disappointment of lakhs of central government employees, who are demanding hikes beyond the Pay Commission recommendations, the government has so far taken no decision on considering their demands.
Though the central government employees may be feeling disappointed, it can’t be ruled out that the government may change its stand and provide relief being sought by its staff, especially in view of 2019 general elections.
However, no concrete details about the implementation of the recommendations are available.
In an official reply to the Rajya Sabha last month, union minister of state for finance P Radhakrishnan had said Narendra Modi government was not considering a hike in the minimum pay beyond the recommendations of 7th pay commission.
“The minimum pay of Rs18,000 pm and the fitment factor of 2.57 are based on the specific recommendations of the 7th Central Pay Commission in the light of the relevant factors taken into account by it. Therefore, no change therein is at present under consideration,” the minister had said in his reply to a question raised by Samajwadi party MP Neeraj Shekhar.
The central government staff has been demanding a hike in fitment factor from 2.57 times to 3.68 times. However, the government has not taken the demand into consideration.
Meanwhile, the Department of Personnel and Training has okayed the grant of leave travel concession (LTC) benefits to Indian Railways’ staff and their spouses. Earlier, railway employees and their spouses were not entitled to LTC as already enjoyed the benefits of free pass for traveling in trains. As per a DoPT circular, it has been decided that the “Railway employees may be allowed to avail all-India LTC once in a block of four years.”
The ‘All-India LTC’ will, however, be purely optional for railway employees, reads the official circular.
The railway staff will not be eligible for “Home Town LTC” and they will have to surrender privilege passes for the year in which they want to get LTC allowance.
Earlier reports had claimed that the 7th Pay recommendations will become effective from 1 April. But central government staff needs to wait for the official word.