Cheer for employees as tax-free gratuity cap doubled to Rs 2 million

Parliament on Thursday passed a key bill that will empower the government to fix the amount of tax free gratuity and the period of maternity leave with an executive order.

The Rajya Sabha, which has failed to transact any significant business over the last fortnight due to protests by various parties, today passed the Payment of Gratuity (Amendment) Bill without discussion.

The bill moved by Labour Minister Santosh Kumar Gangwar was passed by a voice vote.

The Lok Sabha had given its approval to the important bill last week.

The legislation will enable the government to enhance the ceiling of tax free gratuity to Rs 2 million from the existing Rs 1 million for employees falling under the Payment of Gratuity Act.

After the implementation of the 7th Pay Commission, the ceiling of gratuity amount for central government employees was doubled to Rs 2 million.

It also allows the government to fix the period of maternity leave for female employees as deemed to be in continuous service in place of the existing 12 weeks.

The amendment to the payment of gratuity law comes in the backdrop of Maternity Benefit (Amendment) Act, 2017 enhancing the maximum maternity leave period to 26 weeks.