Payment of Gratuity (Amendment) Bill, 2017 to double tax-free gratuity to Rs 20 lakh


The maximum limit of gratuity for private-sector employees, who are covered under the Payment of Gratuity Act, 1972, also increased

The Central Government has given its approval for the introduction of the Payment of Gratuity (Amendment) Bill, 2017 in the Parliament. The Bill will double the tax-free gratuity to Rs 20 lakh from the current upper ceiling of Rs 10 lakh for the employees of the formal sector.

The Gratuity Act is a key social-security legislation for the wage earners in industries, factories and other establishments.

The Payment of Gratuity (Amendment) Bill, 2017 will put the maximum limit of gratuity of employees of the private sector as well as the public undertakings and autonomous organisations, which come under government regulation and are not covered under the Central Civil Services (Pensions) Rules. The maximum limit is Rs 20 lakh, which is at par with the Central-Government employees.

As per the CCS (Pension) Rules of 1972 the maximum ceiling was fixed at Rs 10 lakh, but after the implementation of the 7th Pay Commission, the new ceiling will be Rs 20 lakh, which is effective from January 1, 2016.

The Government decided to increase the maximum limit of gratuity for private-sector employees also, who are covered under the Payment of Gratuity Act, 1972. The Act is applicable to firms employing 10 or more persons.

The main reason for this amendment is to provide social-security benefits to employees, who retire due to rules of superannuation or physical disablement or impairment of vital parts of the body. The increase in inflation and wages was also factored in while making this decision.


  1. Dear sir,
    I want clear information , i.e. I am retired from a Major Port Trust in the month of August 2016, and My Basic Pay + D.A. = 72500 after completion of 38 years 7 months so, how much i have to eligible to get In this connection I have already received Rs.1000000/- I hope that I am also eligible to get the balance amount as arrears. please confirm.

  2. whether the proposed amendment in the Payment of Gratuity Act is effective from 01.01.2016 or from the date of notification.

  3. the Gratuity amount for Government employees has been increased to Rs.20 lakhs wef from Jan 2016. However, for employees of Private companies there has been no clear information for the effective date though Hon PM has given approval. One has to wait for the amendment bill that will get passed.

  4. Sir
    I retired from Bank as Chief Manager on 30.06.2016
    I was paid gratuity as per old rules i.e.Rs1250000
    Please let me know the effective date of increase
    whether i am eligible for arrears from 01.01.2016
    against my entitlement of Rs20 lakh. I put in service for 39 years 1 month

  5. Respected Sir
    I am retired from Govt of Maharashtra undertaking Corporation in the month of July 2016. I have got gratuity of Rs. 10.00 lakhs even I was entitled for about Rs. 16.00 lakhs whether the notification from Public undertaking corporations are already issued or yet to be issued please confirm.
    With kind regards

  6. Sir,
    I have retired from Central PSU as an executive drawing salary of Rs 104000/- PM (Basic+DA) on 30.06.2016. I received Rs.1000000/- as gratuity. I wish to understand that am I entitled more of amount of increased gratuity if yes, to what amount. Kindly clear my dilemma of mind.


  7. Sir,
    Is the Rs.2000000 limit is made compulsory for all private sector staff? Also, please let me know by when the new law related to the increase in gratuity to private sector will be applicable.

  8. I retired from PNB on 30.09.2016as scale two manager & get gratuity amount of Rs. 10.40 lack approx under which Rs. 10 lacs were tax free & on remaining amount tax paid, whether I will be benefited under gratuity amended act, at the time of retirement, I am getting salary of Rs. 85000 approx P.M

  9. I have resigned from a private software organization on
    22-May-2017 and I was paid 10 L as gratuity because of ceiling though I was eligible for more. Now that the cap/ceiling is increased 20 L and made effective
    01-01-2016, will I be getting the remaining amount?


  11. I was retired on 31st Aug 2017 and I got 10 lac as gratuity the excess AMT of eligibility difference will be paid by bank? I am bank retired bank employee

  12. I retired in august 2017 and got only as per old slab of Rs.10 lakhs.I am a coop bank employee and my total service amount exceeds as per calculation.Am I eligible for did.amount.

  13. I retired on 31st August 2017 I got Rs 10 lac will I get difference amt when bill passed by govt while govt employee are getting as per new limit

  14. I retired from SBI on 29.02.2016 and get Rs.10 lakh maximum as celing.Now ceiling increased Rs.20 lakh.Can you inform me that I will get difference amt from SBI.rrrrtrr

  15. Govt. have fixed the date of enhancing gratuity for their employees wef 1.1.2016 then why the date for others whether PSUs employees or pvt cos. employee will differ. Hopefully the date as well as amount will be the same i
    e. 1.1.2016.

  16. What is the effective date of Gratuity enhancement from Rs. 10 lacks to 20 lacks as per Bill passed in Parliament ? Will the PSUs employees retired after 1.1.2016 get arrears on this account?

  17. I have retired as Chief Accounts Officer from Jodhpur Discom (Govt. Of Rajasthan undertaking) on 31.08.2016 and received Rs. 10 lac as gratuity being maximum limit. Whether I will be benefited from amended bill.

  18. i leftr the job on 30/7/2016 and recieved gratuity as per applicable law at that point in time, will i be benifited with this ammendment to get remaining amount

  19. I am working in a cooperative dairy in Kerala.Are we also eligible to get this benefit? In act says, Maximum ceiling for pvt industry is removed. If the management is willing, will they get more than 20 Lakhs.

  20. The employees of PSUs and Private sector employees are also exposed to the same rate of inflation as the Central Govt.employees faced & Gratuity is a major social security measure for them also…Hence it must be made payable to them from the same date ie 01/01/2016 in order to maintain equitable social justice…

  21. It is very shameful that central govt always assured that amended gratuity of Rs 20 lac will be effective from 0101.2016 at par with central govt employees but they have not done when the same is notified in official Gazette. It is purely a case of cheating of psu employees and a utter discrimination between central govt & psu employees. Govt should immediately take action for making it effective from 01.01.2016 failing they will face the consequences in general election 2019

  22. This is absolutely discrimination of law. Govt. cannot give benefit to a specific group of people of India and deprite others. The effective date must be same for all and this issue must be brought to the notice of the Prime MInister.

  23. The government should ensure that the same is paid with effect from 01.01.2016 to all the retired PSU employees. It was shocking to see that it only effective from 29.3.2018. All those who retired after 01.01.2016 to 28.3.2018 has been left in the lurch. This is not fair.

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