Central Government Employees Gratuity: The Dearness Allowance received by Central Government Employees has crossed 50 percent. Due to this increase in dearness allowance, the gratuity received by central employees on retirement from January 1, 2024 has become Rs 25 lakh, which earlier used to be Rs 20 lakh. Central employees do not have to pay any tax on the gratuity of Rs 25 lakh they receive on retirement. This is completely tax-free. However, the tax-free gratuity limit for employees working in the private sector is only Rs 20 lakh.
Gratuity becomes Rs 25 lakh
The Department of Pension and Pensioners’ Welfare, under the Ministry of Personnel, Public Grievances and Pensions, issued an office memorandum increasing the maximum limit of gratuity following the recommendations of the 7th Pay Commission after the dearness allowance of central government employees reached 50 percent. Has gone. It was told in this order that on the basis of the government’s decision to implement the recommendations of the Seventh Pay Commission, the maximum limit of retirement gratuity and death gratuity under Central Civil Services (Pension) 2021 has been increased by 25 percent and It was increased from Rs 20 lakh to Rs 25 lakh, which has come into effect from January 1, 2024.
What is gratuity?
Gratuity is the amount given to employees as a reward for the services they have rendered to their employer. This is given to the employee in return for his long-term services in the organization on his retirement or leaving the company after a period of 5 years. Gratuity is a component of the gross salary of any employee but it is not given regularly. Rather, a lump sum payment is made when the employee leaves the company.
This is how gratuity is calculated!
Gratuity is calculated on the basis of the salary the employee receives every month. To get gratuity, it is necessary for any employee to provide continuous service for at least 5 years. However, this rule does not apply in case of death or disability of the employee. To calculate gratuity for a period of 5 years, 240 days in a year are counted as working days. Gratuity on retirement of any employee from service, on being eligible for retirement, on resignation after serving the same company continuously for 5 years, on death of any employee or on becoming disabled due to illness or accident. Are being given.
Demand for change in rules of gratuity calculation
Recently, representatives of trade unions, in the pre-budget meeting with Finance Minister Nirmala Sitharaman, have demanded changes in the gratuity calculation rules so that employees can get more gratuity on retirement. These organizations have demanded the Finance Minister to increase the calculation of gratuity payment to one month’s salary instead of 15 days’ salary so that employees can get more gratuity on retirement.
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