The Gratuity limit rose from 3.5 lakhs to 10 lakhs

Posted by sri on March 5th, 2010 in India | Comments Off

On Thursday, Prime Minister Manmohan Singh in a cabinet meeting has decided to raise gratuity limit. It’s a good news for private sector employees, who will get the gratuity of 10 lakhs without any tax. According to gratuity act of India, its limit was 3.5 lakhs. Now, this limit has been raised from 3.5 lakhs to 10 lakhs. This increment in the gratuity will give advantage and relief to private sector employees. This proposal of Labour and Employment Ministry has been given approval. Gratuity is to be paid to any employee only he provides service for a minimum time of five years at a stretch with his employer in company.

To fulfill the scarcity of nurses and midwives, CCEA has taken a decision to open 137 midwife and General Nursing schools in Bihar, Chhattisgarh, Madhya Pradesh, Uttar Pradesh, Uttarakhand, Rajasthan, Orissa, Himachal Pradesh and in other few places. The budget of this project is 1370 crores.

For the in a Gratuity calculation the formula is

1. (BASIC / 26) X 15days X number of years of service

OR

2. BASIC + DA (last pay drawn) X (15 / 26) X number of years of service

This calculation is done as per the last average remuneration drawn and the time in years served by an employee.

Really it’s a big treat to private sector employees.