(FE)
The Union Cabinet is likely to consider tomorrow a draft amendment bill which seeks to double the ceiling of tax-free gratuity to Rs 20 lakh under the Payment of Gratuity Act. Besides, the bill seeks to enable the central government to change the ceiling for tax free gratuity after factoring in rise in income levels by an executive order bypassing Parliament route to amend the law. “The bill to amend the Payment of Gratuity Act is likely to be considered and approved by the Union Cabinet in its meeting scheduled tomorrow,” a source said.
After the amendment in the Act, formal sector workers would be eligible for up to Rs 20 lakh tax-free gratuity. Last month, the central trade unions had agreed on the proposal in a tripartite consultation with the Labour Ministry. However, the unions had demanded the removal of conditions asking to have at least 10 employees in an establishment and minimum five years of service for payment of gratuity.
