Ahead of 2019 general elections, Modi government might announce a huge news related to gratuity of central staff.
Ahead of 2019 general elections, Modi government might announce a huge news related to gratuity of central staff. According to Zee Media sources, the Centre might reduce the time span of getting gratuity. The announce could be make by the end of this year.
Sources told that the labour ministry has asked industry's opinion related to the same.
Besides, sources have revealed that the fixed term employee will also receive benefits even if he or she has a term less than 5 years. However, it will be debended upon the total span of the employee's tenure.
Earlier, the government has notified doubling of the limit of tax-free gratuity to Rs 20 lakh in private sector, bringing in cheer. The notification follows changes in the Payment of Gratuity Act which had empowered the government to fix the ceiling of the retirement benefit through an executive order. DNA Money spoke to personal finance experts to understand what's in it for you.
Grand Gratuity
So far, formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving job or at time of superannuation. Now, that money has doubled to Rs 20 lakh.
Gratuity exemption under the Income Tax Act is linked to the limits specified in section 4 of Payment of Gratuity Act – 1972. Earlier this section specified a fixed sum of Rs 10 lakh, which now with the amendment to the Payment of Gratuity Act, the government is authorised to change the limit by way of a notification.
"Hence with this amendment, the government will easily be able to change the limits for the payment of gratuity, whenever needed considering the need. At the same time it's a big relief for the private sector employees as the gratuity received by them up to Rs 20 lakh will now qualify for tax exemption under the Income Tax Act," says Chetan Chandak, head of Tax Research, H&R Block India.
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