Centre notifies law for doubling tax-free gratuity to Rs 20 lakh

New Delhi: The government has notified legislation that double tax-free gratuity for formal sector employees to Rs 20 lakh.

The Payment of Gratuity (Amendment) Bill, 2018, which was passed by the Lok Sabha on March 15 and by the Rajya Sabha on March 22, has been brought in force on March 29 after assent from the President, an official statement said on Friday.

"This will ensure harmony amongst employees in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive a higher amount of gratuity at par with their counterparts in the Government sector," it said. Earlier, the upper ceiling on gratuity amount under the act was Rs 10 lakh. With the implementation of 7th Central Pay Commission, the ceiling was raised to Rs 20 lakh for the central government employees effective January 1, 2016.

Also, the Bill also envisaged to amend the provisions relating to calculation of continuous service for gratuity in case of female employees.