Modi govt decides against retrospective benefits of new gratuity law

Gratuity law

Narendra Modi govt decides against retrospective benefits of new gratuity law

The Narendra Modi government has decided not to pass the benefits of new gratuity law with retrospective effect, a media report said today.
The Payment of Gratuity (Amendment) Bill, 2018 was passed by the Lok Sabha on March 15 and by the Rajya Sabha March 22 and was brought in force on March 29. The law raises the limit of tax-free gratuity to Rs 20 lakh from the earlier limit of Rs 10 lakh.
The law was to bring parity between public and private sector employees as the ceiling of gratuity amount for central government employees was doubled to Rs 20 lakh after the implementation of the 7th Pay Commission.
Prime Minister Narendra Modi had hailed the move as a “significant pro-people measure which would benefit lakhs of Indians.”
While the benefits for the central government employees became effective from 1 June 2016, the government had notified the higher gratuity limit for private sector employees with effect from March 29, 2018.
According to a Business Standard report, the labour and employment ministry received “a large number of representations” calling from making the gratuity law effective from June 1, 2016.
But the government decided against the retrospective effect implementation of the new law fearing that it may put an extra burden on the companies.
Formal sector workers with five or more years of service are eligible for gratuity after leaving a job or at time of superannuation. Gratuity is computed at 15 days salary for each completed year of service and up to Rs, 20 lakh is tax-free.
The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. The law is applicable to employees, who have completed at least five years of continuous service in an establishment that has 10 or more persons.
Source: DNA India

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