7th Pay Commission salary package: Money point that Central government employees just must know about

ZeeBiz WebTeam | Jul 22, 2020, 09:33 PM IST

7th Pay Commission salary package: All aspects of the pay package are important for central government employees, especially the ones that have long-term potential to bring large benefits. Here is one which is of critical importance. For a central government employee, understanding the whole pay commission and its impact on them is understood by the hike in their monthly salary. Though, there are various other financial matters that need to be understood because misunderstanding or ignoring any of them can be costly. Gratuity ceiling is one of such financial matter.

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7th Pay Commission recommendation on gratuity ceiling

7th Pay Commission recommendation on gratuity ceiling

Including various recommendations like minimum salary and pension, the 7th Central Pay Commission (CPC) recommended an increase in gratuity ceiling from Rs 10 lakh to Rs 20 lakh, which the central government didn't find any problem in accepting. Photo: Reuters

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7th CPC recommendation of gratuity ceiling increase

7th CPC recommendation of gratuity ceiling increase

Apart from this, the 7th CPC also recommended an increase in ceiling on gratuity by 25 per cent whenever the Dearness Allowance (DA) rises by 50 per cent, which also got accepted by the Center. Photo: PTI

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7th CPC on Gratuity

7th CPC on Gratuity

As per the 7th Pay Commission panel recommendations on gratuity ceiling and its indexation, "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." Photo: Pixabay

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7th CPC on Gratuity eligibility

7th CPC on Gratuity eligibility

Right now, central government employees with five or more years of service are eligible for gratuity benefit after leaving the job or at 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. Photo: IANS

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Payment of Gratuity Bill in 2017

Payment of Gratuity Bill in 2017

For the formal sector employees, the central government 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. Later on it got approval from both houses of the parliament. Photo: Reuters