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February 27, 2017

7th Pay Commission latest news: Gratuity limit doubled from Rs 10 lakh to Rs 20 Lakh

New Delhi: In a good news for government employees of organised sector, the central government has decided to increased the gratuity limit to Rs. 20 lakh from Rs. 10 lakh, on the recommendation of 7th pay commission panel.

The decision came after a meeting between the labour ministry and representatives from states, employees and employers which took place on Thursday. “All the stakeholders—states, Centre, unions and the industry representatives were on the same page to enhance the gratuity ceiling from Rs10 lakh to Rs20 lakh,” a labour ministry spokesperson said after the meeting.


The unions demanded the removal of conditions asking to have at least 10 employees in an establishment and minimum five years of service for payment of gratuity. Business portal NDTV profit quoted Manoj Nagpal, CEO of Outlook Asia Capital, saying it is not advisable to put money entirely into debt as, “chances are that one might run out of his/her corpus.” He added, “They have to plan for next 20-25 years as the life expectancy has increased significantly. It is advisable that a person puts at least 20-25 per cent in equities.”

“While accepting the maximum payment limit of Rs 20 lakh as an interim measure, the unions demanded that the ceilings/ limit with respect to number of employees and years of service should be removed,” the All India Trade Union Congress (AITUC) said in a statement. “The central trade unions have been urging the government that the ceiling in the amount of gratuity should be removed,” the statement further read.

At present, as per the Payment of Gratuity Act, an employee is required to do a minimum service of five years to become eligible for gratuity amount. Moreover, the Act applies to those establishments where the number of employees is not less than 10.The statement said the application of amended provision regarding maximum amount should be made effective from January 1, 2016 as done in the case of central government employees.

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