How Does the New Gratuity Bill Affect Teachers? Let's Discuss Its Impact

Dear friends,

I am attaching the Payment of Gratuity (Amendment) Bill 2009, passed by Parliament recently. It provides for including teachers in the definition of "employee" with retrospective effect.

Regards,

Dear all!!!

Has it been passed by both the houses of parliament and Presidential assent accorded? An attachment is enclosing the bill. But has it become effective? I haven't read about it in the news so far.

Regards,
KK

Hi,

As per my knowledge and discussions with experts, the aforementioned bill has not yet become an Act.

After a bill has been passed by both the Houses of Parliament, it is presented to the President for his/her assent. Only then does it become an Act. However, in India, it is usually a formality, as the President may send it back for reconsideration only in exceptional cases. This Bill is expected to receive the President's assent and will come into force with retrospective effect.

Please read the following section which has been newly inserted by the amendment Bill:

"13A. Notwithstanding anything contained in any judgment, decree, or order of any court, for the period commencing on and from the 3rd day of April 1997, and ending on the day on which the Payment of Gratuity (Amendment) Act, 2009, receives the assent of the President, the gratuity shall be payable to an employee in pursuance of the notification of the Government of India in the Ministry of Labour and Employment vide number S.O. 1080, dated the 3rd day of April 1997, and the said notification shall be valid and shall be deemed always to have been valid as if the Payment of Gratuity (Amendment) Act, 2009, had been in force at all material times, and the gratuity shall be payable accordingly:

Provided that nothing contained in this section shall extend, or be construed to extend, to affect any person with any punishment or penalty whatsoever by reason of the non-payment by him of the gratuity during the period specified in this section, which shall become due in pursuance of the said notification."

Please let me know if you have any further questions.

Dear All,

I am attaching the All India state-wise Labour Fund details for the reference of all HR community.

Regards,
Murali (Tatapranav)

Dear All,

Attached is the CBDT notification dated 18.12.2009 regarding Income Tax on perks.

K.B. Prasanna

Hi, I'm Vennela. I am currently pursuing my MBA with a specialization in HR. I am planning to focus my project on the Banking sector. Can anybody suggest various HR topics that can be explored in the Banking sector?

Venni

Dear friends,

I am attaching the Workmen's Compensation Amendment Act 2009 as finally assented by the President in Word format.

Regards,

The undernoted is the news that appeared in the Tribune of 7/01/2010.

Hike likely in private employees' gratuity
Anita Katyal
Our Political Correspondent

New Delhi, January 6
The Centre is proposing to raise the ceiling for payment of gratuity for private sector employees from Rs 3.5 lakh to Rs 10 lakh. The proposal is to be placed before the Union Cabinet for its approval at its meeting tomorrow.

The move, which has been in the pipeline for several months, follows the Sixth Pay Commission recommendation that has raised the limit for Central government employees. Once the Cabinet approves the Labour Ministry's proposal tomorrow, it will bring parity between the government and private sector employees.

Sources said there had been a spate of representatives from the private sector demanding such an extension in the gratuity payment after the Centre had changed the rules for the government employees. The matter had been under consideration, as the Labour Ministry first elicited the views of the stakeholders concerned.

The trade unions and other representatives of employees, it is learnt, had gone as far as to suggest that there should be no ceiling on the payment of gratuity. However, the Centre decided to put the private sector and the government employees at par by fixing the upper limit at Rs 10 lakh as it was felt that such a drastic move would place a financial burden on the employers.

The Payment of Gratuity Act, 1972, applies to factories and other establishments employing 10 or more persons. The employees are entitled to payment of gratuity on completion of 10 years in service at the rate of 15-day wages for each year of service or part of it in excess of six months subject to a maximum of Rs 3,50,000.

Since gratuity is considered income, an employee has to pay taxes on it. However, gratuity up to Rs 3,50,000 is exempted from tax under the provisions of Section 10(10) of the Income Tax Act, 1961.

In the last Parliament session, the Centre had amended the Gratuity Act to clarify the definition of an employee. According to the new law, anybody who is earning a wage is characterized as an employee and is liable to receive gratuity.

Has the amendment to the bill been cleared.

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Ludhiana

Payment of Gratuity (Amendment) Act 2009, as assented to by the President, is attached in Word format.

Thanks

Thank you, Agarwal Saheb. This amendment was long awaited by employees who were not included in the definition. The retrospective effect would also make many eligible who did not get the benefit.

In the newspaper dated 7.1.2010, I read that the ceiling limit of Rs.3.50 under the Gratuity Act, 1972, has been enhanced to Rs.10 Lacs. Can you please confirm this information?

Regards,
Jaspal Anand

Let me know whether Section 4 of the Gratuity Act 1972 has also been amended to pay gratuity of Rs. 10 lacs to private sector employees.

In the Cabinet session last Saturday, the existing gratuity limit of 3.5 lacs was to be revised to 10.00 lacs.

Has anyone of us traced out the Gazette copy? If so, please circulate.

Regards,
Sushil

Dear PCA,

Re: WCA, 1923

If possible, please provide the members of this forum with a copy of the notification in this regard, or at least inform them of the date of notification. The amendment will only take effect after the notification as per section 1(2) of the Amended Act.

Wishes,
Jpratap

Kindly let me know whether the cabinet approved the enhancement of gratuity from 3.5 lac to 10 lac for private employees by amending the Payment of Gratuity Act.

No, it is not yet amended. As per newspaper reports, the government is planning to introduce a bill in the Budget session of Parliament in this regard.

I am also trying to get the same information. If anyone has any updates on this matter, please update.
Regards,
Jatin Suley

Thanks for all the information, everyone. I have a question regarding the limit for the gratuity payment at the end of service. The 1972 act states that only 3.5 lakhs can be paid at the time of retirement – is this true? What happens to the balance amount? Also, how is the gratuity calculated?

Dear,

When the amount of gratuity payable to an employee shall not exceed Rs. 3.5 lakhs, then nothing is going to happen to the balance amount. Gratuity amount is to be calculated as per section 4 of this Act.

With Regards,
R.N.Khola

Thank you for all the information, everyone. I have a question regarding the limit for the gratuity payment at the end of service. The 1972 act states that only 3.5 lakhs can be paid at the time of retirement - is this true? What happens to the balance amount? Also, how is the gratuity calculated?

I would like to know whether the President of India has assented to the latest amendments in the Payment of Gratuity Act. Can someone send a file/attachment regarding the above matter.

Dear Mr. Agarwal,

There is a contradiction in The PG Bill 2009 as it clearly states that it excludes Government officials as "Clearly Stated in the bill" (please read and refer). It needs to be presented to the President of India for "Assent"; only then would it become law.

There are some bills presented in Parliament that do not need to be placed before both houses.

Jaikumar Ranganathan

Dear Udita,

That is true, we can pay only Rs. 3.5 lakhs as the "Maximum Limit prescribed for I-T exemption." However, an employer can pay any amount as gratuity, but it is duly taxable as nowadays employers are insuring their payouts by creating a Gratuity Policy.

The calculation of Gratuity is simple:
Salary (Basic + DA) x 15/26 x Number of years of service.

Basic qualifications:
- Undisturbed service of continuous 5 years with one single employer.

I believe this would satisfy your requirements.

Regards,
Jaikumar Ranganathan
(0)9176809600 / 9444020774

Please find attached the notification for an increase in the ceiling for gratuity from Rs. 3.50 lakhs to 10 lakhs.

Thank you.

Could you please advise on the following:

1. What are the values for consideration as CTC?
2. Please also confirm whether Gratuity, which is payable upon retirement or leaving the service after completing a minimum of 5 years, is a part of the CTC.

Regards,
Jaspal Anand