Parliament’s monsoon session has started. In this session, the government will also try to pass many important bills. One of these is also amendment to the Gratuity Act. Under this, the government can double tax exemption on gratuity. So far, tax on a gross amount of more than Rs 10 lakh has been taxed, but now the preparation for the limit of gratuity on the gratuity is up to Rs 20 lakh.
The cabinet approved this decision on March 15 this year. The gratuity is given to the employee on behalf of the employer after retirement. Apart from this, companies give this benefit to the employers even after getting employment for 5 years or more.
Under the existing Payment of Gratuity Act, 1972, the government employee receives tax exemption on the amount of gratuity that the government employees have to pay no tax on the gratuity. On the other hand, non-government employees do not have any tax on the amount of gratuity received up to Rs. 10 lakhs on retirement, but after this, the tax has to be paid.
Rules applicable to these institutions
Gratuity Act applies to institutions having a number of 10 or more employees. Under this Act, if any institution comes within the purview of this Act, then the rule is applicable to the number of employees even though they are less than 10. If an institution is not under it then it can pay exaggeration to its employees.
Under the Act, any employee works in the institute for 5 years or more for a long time, only then he is entitled to the Gratuity. However the disruption in case of illness, accident, takeoff, strike or lockout is not added to it.
When does the gratuity pay
Generally gratuity is paid only when the employee retires. However, in some cases other than, the employee gets the benefit of the gratuity, like:
- In the case of pension
- If he resigns after working for 5 years in the institute
3. If an employee fails to complete 5 years and dies only in the middle, then his family will get the amount of gratuity.