7th Pay Commission: Don't confuse with Death Gratuity! Here is what 7th CPC recommended and what Centre accepted
7th Pay Commission: Certain payments during employment are clear to an employee but not to the members of his or her family. Pension and Gratuity are two such payments.
7th Pay Commission: Certain payments during employment are clear to an employee, but not to the members of his or her family. Pension and Gratuity are two such payments. Out of these two, gratuity is more complex for the family members of government employees. And if, tragically, an employee passes away during his or her service, it is crucial for the kin to understand what it involves and how family members can get payments in their hour of need. So, rationalisation of gratuity is something that the government employees and their family members should know. As per the 7th Pay Commission recommendations, which has been accepted by the Centre, if a government employee dies in less than one year of service, rate of death gratuity is two times of his or her monthly emoluments. These emoluments would increase to six time if the government employee dies in the service period of more than one but less than five years of services,
The 7th Pay Commission panel recommendations on gratuity ceiling and its indexation that central government accepted said, "The Commission recommends enhancement in the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh from 01.01.2016. The Commission further recommends the ceiling on gratuity may increase by 25 per cent whenever DA rises by 50 per cent."
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Currently, central government workers with five or more years of service are eligible for tax-free gratuity after leaving the job or at the time of superannuation under the Payment of Gratuity Act, 1972. The 1972 Act was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.
For further information to the formal sector employees, the central government has amended the Payment of Gratuity Bill in 2017 paving the way for doubling the limit of tax-free gratuity to Rs 20 lakh and empowering the government to fix the ceiling of the retirement benefit through an executive order. The Rajya Sabha passed the bill, which was approved by the Lok Sabha on March 15, 2018.