Union Budget 2018: Tax free Rs 20 lakh gratuity for formal sector employees soon

Representational pic

The Payment of Gratuity Amendment Bill 2017 is likely to be passed in the forthcoming Budget session, which will make formal sector workers eligible for tax free Rs 20 lakh gratuity. At present formal sector workers with five or more years of service are eligible for R10 lakh tax free gratuity after leaving job or at time of superannuation.

"The Payment of Gratuity (Amendment) Bill, 2017 will be passed in the Budget session of Parliament, expected to begin by the end of this month," a source said. The source further said, "The government wants to provide tax free gratuity of R20 lakh to organised sector workers at par with Central government".

The bill was introduced in the Lok Sabha in winter session of Parliament last month. Once the bill is passed by Parliament, the government will not be required to go to it again for deciding the quantum of tax free gratuity.

The bill seeks to allow the government to notify the period of maternity leave and gratuity that can be availed by employees under a central law. The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.

Rs 10 lakh
The current gratuity formal sector workers are eligible for

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