7th Pay Commission: Tax-free gratuity ceiling for private sector doubled to Rs 20 lakh


The private sector employees have something to rejoice before the current fiscal comes to a close as government has notified doubling the limit of tax-free gratuity for them to Rs 20 lakh to Rs 10 lakh, said a PTI report. The notification has come in the wake of amendment in the Payment of Gratuity Act which had empowered the government to fix the limit of the through an executive order. The ceiling of tax-free gratuity for central government employees had already been revised to Rs 20 lakh with the implementation the 7th Pay Commission. The employee unions have been demanding for inclusion of the change in accordance to the pay panel recommendations in the Payment of Gratuity Act.

The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. Till now, private sector workers with five or more years of service were eligible for Rs 10 lakh tax-free gratuity after leaving job or at time of superannuation. The Act encompassed employees who have completed at least five years of continuous service in an establishment that employs 10 or more persons.

By virtue of the amendment bill approved by Parliament earlier this month, government could also fix the period of maternity leave. The change with respect to maternity leaves comes against the backdrop of the Maternity Benefit (Amendment) Act, 2017, enhancing the maximum maternity leave period to 26 weeks.

Railway staff gets LTC for first time

As per a Department of Personnel and Training (DoPT) order, railway employees could now avail Leave Travel Concession (LTC) for the first time ever. The 7th Pay Commission had recommended that they be awarded the benefits of travel concession awarded to other government servants. The existing LTC instructions stated that Indian Railway staff and their spouses are not entitled to LTC as they already have the facility of free pass available to them.

“The matter has been considered in this department in consultation with Ministry of Railways. It has been decided that Railway employees may be allowed to avail all-India LTC once in a block of four years… The ‘All-India LTC’ will be purely optional for railway employees,” PTI quoted a DoPT circular.

However, railway employees will continue to be governed by the Railway Servants (Pass) Rules and availing of the “All India LTC” under the CCS (LTC) Rules by them will be facilitated through a special order under the relevant provision of the said Pass Rules, it said.

The DoPT circular also clarifies that railway employees will not be eligible for “Home Town LTC”. Also they will have to surrender the Privilege Passes (concessional or free tickets) admissible to them in the calendar year in which they intend to avail the leave travel allowance, the ministry said. They would continue to be eligible for other kinds of passes, though, such as the duty pass, school pass and special passes on medical grounds, as admissible under the pass rules, the order stated.

If the railway employee has already availed of a Privilege Pass, then LTC will not be allowed in that year, it said. The railway employees on deputation to any other organisation, including railway PSUs, would also continue to be eligible for optional LTC in lieu of Privilege Pass entitlement, the DoPT circular said.businesstoday