Govt doubles income tax exemption limit for gratuity to Rs20 lakh

The government has doubled the income-tax exemption limit for payment of gratuity to Rs20 lakh from existing Rs10 lakh, offering a big relief to retired employees, especially in the private sector with no worthwhile pension benefits.

The ministry of finance today announced the enhancement the income tax exemption limit for gratuity under section 10 (10) (iii) of the Income Tax Act, 1961 to Rs 20 lakh.  
Minister of state for labour and employment Santosh Kumar Gangewar expressed the hope that this would benefit those employees of PSUs and other employees not covered by Payment of Gratuity Act, 1972 and thanked the finance minister for enhancing the exemption limit.
The ceiling of gratuity amount under the Payment of Gratuity Act, 1972 has been raised from time to time keeping in view over-all economic condition and employers capacity to pay and the salaries of the employees, which have been increased in private sector and in PSUs. 
The latest enhancement of ceiling of gratuity follows a government notification dated 29 March 2018 under which the gratuity amount ceiling has been increased from Rs10 lakh to Rs20 lakh, with effect from 29 March 2018.
Gratuity Act applies to all employees working in an organisation that employs 10 or more employees during a year.  The move will benefit lakhs of salaried employees, who are now retiring as well as those who retired over the last 12 months.