Private Sector Employees Gratuity Ceiling Raised to Rs 20 Lakh From 29th March

Gratuity (Amendment) Act, 2018 brought in force on 29th March, 2018

NEW DELHI: Private Sector Employees Gratuity Ceiling Raised to Rs 20 Lakh From 29th March. Today, the govt has notified increase on the ceiling of tax-free gratuity to Rs.20 lakh for the employees of the private sector. Lok Sabha has passed the Payment of Gratuity (Amendment) Bill 2018 on 15th March 2018. The Rajya Sabha had passed the bill on 22nd March this year. The bill has been brought into effect on 29th March.

The Payment of Gratuity Act, 1972 applies to establishments having employees 10 or more. The main purpose of enacting this Act is to provide social security to workman after retirement, whether retirement is a result of superannuation or physical disablement or impairment of vital part of the body.

Therefore, the Payment of Gratuity Act, 1972 is essential social security legislation to the wage-earning population in industries, factories and establishments. The existing upper ceiling on gratuity amount is Rs. 10 Lakh under the Act. The provisions for Central Govt employees under CCS (Pension) Rules, 1972 concerning gratuity are also similar.

Before implementation of Seventh Central Pay Commission, the ceiling under Central Civil Services (Pension) Rules, 1972 was Rs. 10 Lakh. However, with the implementation of 7th CPC, in case of Govt servants, the ceiling has been raised to Rs. 20 Lakhs.

Private Sector Employees Gratuity Ceiling

Due to inflation and wage increase of employees engaged in the private sector, the govt has decided to revise the entitlement of gratuity to employees who are coverable under Payment of Gratuity Act, 1972. Accordingly, the govt has amended the maximum limit of gratuity from Rs.10 lakh to Rs.20 lakh.

The bill also envisages to amend the provisions to the calculation of continuous service for gratuity purpose.

Both the houses of Parliament has passed the bill. This bill will ensure harmony amongst employees in public sector and private sector who are not covered under

The Bill as passed by both the Houses of Parliament, and assented to by the Hon’ble President and notified by the Government. It will ensure harmony amongst employees in the private sector & in Public Sector Undertakings/ Autonomous bodies under Govt who are not covered under Central Civil Services (Pension) Rules.



Ishaan possesses MBA with distinction. He has studied so many publications and conducted researches on Finance, Business. Now He has chosen our organization to write articles on Finance & Business and bring forth to readers.

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