7th Pay Commission latest news: The Centre has provided a host of new benefits which would go a long way in helping its employees save at the time of their retirement or even when they leave their job.
The Government has decided to increase the gratuity ceiling from Rs 10 lakh to Rs 20 lakh. Further, the Payment of Gratuity Bill for formal sector employees has been modified by doubling tax-free gratuity limit up to Rs 20 lakh from previous Rs 10 lakh.
This would come in handy for Central Government employees who want hefty amounts in their accounts when they retire as it won’t be just gratuity they would get but will also help save on taxes.
What is Gratuity: It is a monetary benefit to an employee by the employer but is not paid on a regular monthly basis. Provisions and regulations of gratuities for both government and private employees are governed under the Payment of Gratuity Act, 1972.
In order to avail gratuity benefit, one must fit criteria like eligibility for superannuation, retired from the job, resigned after completing five years of service in a company and death or disability or sickness during service period.
Gratuity is calculated as the tenure of service completed in a company multiplied by last drawn basic salary plus dearness allowances.