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New Delhi : The Union Cabinet chaired by PM Narendra Modi on September gave its approval to introduction of the Payment of Gratuity (Amendment) Bill, 2017, in the Parliament. The Amendment will increase the maximum limit of gratuity of employees in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS (Pension) Rules, at par with Central Government employees.
The Payment of Gratuity Act, 1972, applies to establishments employing 10 or more persons. The main purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is a result of the rules of superannuation, or physical disablement or impairment of vital part of the body.
With implementation of 7th Central Pay Commission, in case of Government servants, the ceiling now is Rs 20 lakhs effective from January 1, 2016.Earlier, it was Rs 10 lakh.Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, the Government is of the view that the entitlement of gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972, according to a PIB release.