Parliament Might Raise Tax Exempt On Gratuity

न्यूज़ वर्ल्ड इंडिया | 0
| July 10 , 2017 , 12:28 IST

The Parliament is expected to vote on a bill this monsoon session that might raise the tax exempt on gratuity from the current Rs 10 Lakh to Rs 20 Lakh, told Labour Minister Bandaru Dattatreya.

Dattatreya also assessed that the bill would soon go to the cabinet for approval since any amendment related to the Payment of Gratuity Bill has to be scrutinized by the cabinet first. He said, “This is on our agenda. It may come in this session. It will soon go to the Cabinet for approval.”

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If this bill is passed by the Parliament, workers in the formal sector will be eligible to claim tax exempt for gratuities up to Rs 20 lakh. Currently, tax-exempt is only eligible for gratuity up to Rs 10 Lakh rupees.

This new Payment of Gratuity Bill raises the bar for the maximum amount of tax exempt from Rs 10 lakh to Rs 20 lakh. This amendment comes in line with the 7th pay commission's recommendations, approved by the government.

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Gratuity is the sum of money an employer pays to its employee at the end of employment. Employees are only eligible for gratuity after at least five years of service in an organization. Also, an employer only needs to pay gratitude if they have 10 or more employees.