The bill to double the amount of tax-free gratuity is likely to be introduced in the coming Monsoon session of Parliament. Union Labor Minister Bandaru Dattatreya gave this information. The monsoon session of Parliament is going to start on July 17. At present, tax-free gratuity limit is 10 lakh rupees.
With the intention of amending the Gratuity Payment Act, this bill will increase the limit of tax-free gratuity on the basis of an increase in the income level of employees through the executive order of the center. Although the draft Bill has yet to get the cabinet approval.
When asked about the status of the Gratuity Amendment Bill, Dattatreya said, ‘This is in our agenda. It can come in this session (monsoon). It will soon be sent to the Cabinet for approval. ‘ After amendment in the law, the employees working in the organized sector will be entitled to tax-free gratuity up to 20 lakh. Under the proposed amendment the limit of the maximum amount has been increased from 10 lakh to 20 lakh rupees.
Earlier in February, union trade unions agreed with the Labor Ministry in a tripartite meeting on this proposal. However, the unions have demanded to remove the condition of minimum five years of service for gratuity and minimum 10 employees. At present, it is mandatory for the employee to get minimum five years of service for a gratuity in one institution. Also, the law applies to establishments where the number of employees is not less than 10.