The gratuity tax-free up to an amount of Rupees 20 lakhs of workers employed in the organized sector can be qualified soon. The Gratuity Payment (Amendment) Bill, 2017 is getting forecasted to go good in the oncoming budget session of the Parliament.
This bill when passed, the formal sector workers need not pay tax on gratuity amount up to Rs.20 lakhs. Staffs servicing in the organized sector not necessary to remit any tax on gratuity up to INR Ten lakh after getting relieved from the job after 5 or more years of service or simply retirement.
The Payment of Gratuity (Amendment) Bill, 2017 will be declared in the forthcoming budget Parliament session. The government likes to offer workers of the organized sector and the Central govt. mens to have gratuity up to Rs 20 lakh tax-free. Actually, the bill got launched in the winter session of Parliament in the month of december 2017.
With the Bill going passed, the central / state no need to set repeatedly for the tax-free gratuity limit. In the bill, the govt. is let to fix the time for maternity leave, whose earnings will be levied under the Central Law.
How 2018 new gratuity is computed. The present latest formula for formal sector workers, the gratuity amount relies on the tenure of service and final drawn monthly salary. The gratuity formula used as:
Last drawn salary (basic salary + da ) X (multiplied by) number of accomplished years of service X 15/26
The time period of over 6 months or more is taken as 1 year. That is one who has serviced 5 years and 7 months of service, the number of years should be opted as 6 years for calculation of gratuity benefit. Similarly, if the working tenure is 5 years and 5 months, for gratuity calculation it will be taken as five years.