Shocking News....Gratuity

Dear friends,

Have some Rude shock in Gratuity front also.

For the past 3 months there were news articles and announcement of increasing Gratuity ceiling from '10 Lakh' to '20 Lakh' for Public sector and private sector employees by way of amending the THE PAYMENT OF GRATUITY ACT, 1972.

yesterday The Payment of Gratuity (Amendment) Bill, 2017 to amend the THE PAYMENT OF GRATUITY ACT, 1972 has been introduced in Lok Sabha.

As a rude shock to all our expectations the word "ten Lakh" is replaced with "amount as may be notified by the Central Government from time to time".

i.e. our gratuity ceiling is not increased to 20 Lakh but at the same time the already existing legal protection to claim 10 lakh as Gratuity is removed.

The amended section 4(3) would be like this

" Sec 4(3) The amount of gratuity payable to an employee shall not exceed "such amount as may be notified by the Central Government from time to time".

So once the law is enacted the Central govt will become all powerful to decide the Gratuity amount for every employee of an organisation.

This is a clear betrayal and abridgment of our rights. There is NO assurance in the bill that Govt will increase the Gratuity.

Its needful to ensure that the word "twenty Lakh" is incorporated in the bill.

KNOW ABOUT GRATUITY CALCULATION

GRATUITY --EASY TO UNDERSTAND

Gratuity

Gratuity is payable on death, retirement, permanent disablement or resignation of an employee and it is calculated by two methods as given below and the amount whichever is higher will be paid.   Gratuity amount up to 10.00 lacs is exempted from Income Tax.


GRATUITY OF AN EMPLOYEE IS CALCULATED WITH TWO METHODS AND WHICH EVER IS HIGHER IS PAID.

METHOD - I


Gratuity Act 1972:

An employee is eligible for gratuity after completion of 5 years of service.   The Gratuity payable under the act is 15 days wages for every completed years of service.   The maximum gratuity payable under the Act is Rs.10.00 lacs from 24.05.2010.

WAGES for this purpose will mean Basic Pay +Spl.Pay+ PQP + FPP (less HRA component) + Dearness Allowance).

The Calculation is as follows:

Gratuity Amount = (Wages) x No of year of service x 15/26
METHOD - II

(as par 10th Bipertite)

Gratuity as per Service Regulations

An employee is eligible for gratuity after completion of 10 years service.   The gratuity payable is 15 months pay up to 30 years of service plus additional 15 days pay for every completed years of service beyond 30 years
WAGES  for this purpose means BP + PQP + Increment component of FPP.


HOPE EVERY ONE CAN UNDERSTAND.


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