Gratuity limit hike to Rs 10 lakh gets Parliamentary nod

NEW DELHI: Parliament on Wednesday approved enhancing the gratuity limit for employees from Rs 3.5 lakh to Rs 10 lakh as also the exemption threshold from income tax on it.

While the Lok Sabha had passed the Payment of Gratuity (Amendment) Bill 2010 on Monday, the Rajya Sabha put its stamp of approval on it today.

Labour Minister Mallikarjun Kharge, replying to a brief debate on the bill said the legislative measure also provides that the income tax exemption limit has commensurately been increased to Rs 10 lakh from Rs 3.5 lakh earlier.

On demands for giving a retrospective effect to the measure, Kharge said, "We want to give a lot, but there should be a capacity (of the employer) to pay and it should reach the beneficiaries."

He gave the same reason for not accepting demands from the members to improve the formula for calculation of gratuity.

The bill was brought following demands from trade unions and others to remove the ceiling or increase the maximum payable amount, which was fixed in 1997.

Earlier participating in the debate, Congress member and veteran trade unionist G Sanjeeva Reddy said payment of gratuity should be done with retrospective effect.

CPI(M) member T K Rangarajan said seasonal workers are not getting benefit and therefore their interests should also be protected.