Gratuity Payment Limits in India: Confused About the Latest Updates? Let's Discuss!

Hi all, is there any limit on gratuity payment? Any new notification, kindly share, please. As per the Indian Gratuity Act, it is mentioned that the payment should not exceed 3 lakhs and fifty thousand. However, when we check online, it shows 20 lakhs, and in January 2024, it increases to 25 lakhs. Please shed light on this topic.

Gratuity Payment Limits

The maximum amount of gratuity that will be exempted from tax is Rs 20 lakhs. This is the maximum amount that any employer is liable to pay as per law, not the maximum amount of gratuity that an employer can pay. Therefore, if the employer is willing to pay more than Rs 20 lakhs, they can do so.

There has been no increase in the maximum amount payable as per the Payment of Gratuity Act. However, following the 7th Pay Commission recommendations, the gratuity payable to government employees has been revised from Rs 20 lakhs to Rs 25 lakhs. This does not mean that employees not covered by the Pay Commission recommendations, such as those in private establishments, will also receive this benefit.