AIBOC issued its circular No. 73 on enhancement of gratuity ceiling giving therein clarifications on the subject. We are reproducing the same here for our readers.
CIRCULAR NO:73 22nd MAY, 2010
TO ALL AFFILIATES/MEMBERS:
ENHANCEMENT OF GRATUITY CEILING - LAW MINISTRY ISSUES GAZETTE NOTIFICATION - DATE OF EFFECT UNDECIDED – FURTHER CLARIFICATIONS
The process of implementation of the amendment to the Gratuity Act 1972 is on. The Parliament approved the amendment to the Gratuity Act revising the current ceiling from Rs.3.5 lacs to Rs.10.00 lacs on 17.05.2010. The Parliament did not take any decision as regards the date of effect leaving it to the Government to come out at the time of the gazette notification. We took up the issue immediately with the State Minister of Labour to take care of this aspect and ensure that the amendment is made effective from 1.1.2006. However, the process of implementation of the amendment is on. The Law Ministry has issued a Gazette Notification after receiving the assent of President amending the ceiling on the Payment of Gratuity from Rs.3.5 lacs to Rs.10 lacs leaving the issue of date of effect to the Central Government. This has caused yet another uncertainty as regards the retrospective date of effect.
We have received an interim reply to our representation from the Ministry of Labour. We have sent another communication to the Labour Ministry re-iterating our demand for implementation of the amendment with effect from 1.1.2006 taking into account the fact that gratuity has been revised in respect of the Central Government employees from the same date, keeping in view the proposed amendment to the Gratuity Act by the Parliament as approved by the Cabinet Committee. A copy of both the circulars were furnished vide Circular Nos. 69 and 71.
In the meanwhile, it is necessary to understand the implication of this amendment in respect of Gratuity payable to our members. There are two types of Gratuity. The first one is the Statutory Gratuity which is a statutory obligation and each and every employer is required to adhere to the provisions of this act. The other one is the Service Gratuity introduced by the institutions to their employees internally, which may be a better one than the Statutory Gratuity payable under the Act.
Those who are receiving Service Gratuity the provisions of Gratuity Act are applicable for the purpose of payment of Income Tax. The amendment which has now taken place enhancing Gratuity from Rs.3.5 lacs to Rs.10.lacs will be applicable for the purpose of exemption of Income Tax. That is to say all those employees who are the beneficiaries of the Service Gratuity, the gratuity amount may go beyond the ceiling as prescribed under the Act and the entire amount of Gratuity upto Rs.10 lacs will be eligible for the Income Tax Benefit. Accordingly, the Income Tax exemption which was available only to the extent of Rs.3.5 lacs will now be available upto the extent of Rs.10 lacs to all those who will draw the Gratuity of more than Rs.3.5 lacs from the date the provisions are made effective.
However, in respect of those who are covered under the Statutory Gratuity, the ceiling can now go upto Rs.10 lacs from the existing ceiling of Rs.3.5 lacs as per the working of the scheme. It is necessary for all those who are covered under the Statutory Gratuity Scheme that the benefit of Ceiling upto Rs.10 lacs is subject to the actual working as per the scheme. The amendment per se does not make every one eligible to higher ceiling of Rs.10 lacs. Hence, they have to workout the actual difference on the basis of their emoluments and can draw the difference between the earlier ceiling with the current ceiling. We have been receiving a number of enquiries from various members as regards the current amendment. Hence this clarification.
We will provide further inputs once the date of effect is advised by the Government and actual cases will be worked out so that they would be able to get the advantage of the amendment in due course.
All our affiliates/members are requested to await further developments in this regard.
With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY
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6 comments:
1)please let us know the efective date of henhancement of gratuity.
2) gratuity paid to PSU's employees / officers is statutory or service ?
3)Income tax on gratuity paid to PSU employees / officers is it taxable ?
4) After increase in gr.pymnt to 10 lakhs payable to PSU employees is it subjected to tax ?
will i get the actual benefit of gratutity greater than 3.5 lacs if i have retired in july 2009
I retired from a Central Govt. PSU (Ministry of Defence)on 31.12.2008.What is the Gratuity that would be applicable to me - is it the 6th CPC wef 01.01.2006 or the dpe guidelines which is a nodal authority for cpse's whose effective date for implementation of enhanced gratuity is 01.01.2007.
Now that the Govt notified effective date for Gratuity amendment as 24.05.2010, there is urgent need to take up the issue once again for the benefit of the staff retired prior to 23.05.2010.After the recent wage settlement the need to achieve this one time benefit is a matter of life and death to retired staff.
it was told the RBI EMPLOYEES GOT THE BACK DATE REGARDING PAYMENT OF GRATUITY . AS AN ORGANISATION YOU CAN COFIRM THE AUTHENTICITY THERE BY THE POOR RETIRED EMPLOYEES CAN GET THE SAID BENEFIT BY APPROACHING OUR IBA
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Oliver Goldsmith was right when he said"Law grinds the poor and rich men rule the law". If you are rich and can employ leading lawyers for your defence, justice can be delayed or denied to the needy. According to the constitution, all are equal in the eyes of law but the real terms some are more equal then others.
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