7th Pay Commission latest updates: Tax free gratuity doubled, LTC benefits for railway employees

Formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving a job or at time of superannuation.

By: Express Web Desk

New Delhi | Updated: April 1, 2018 01:01 PM IST

2 min read

Govt raised the tax-free gratuity ceiling from Rs 10 lakh to Rs 20 lakh. (Express Photo by Praveen Khanna)

In a big relief to employees in the private sector, the Centre raised the limit of tax-saving gratuity to Rs 20 lakh from Rs 10 lakh for the new financial year. Numerous unions have been demanding the hike in the Payment of Gratuity Act for long. Formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving a job or at time of superannuation.

Besides enabling the central government to fix the ceiling of tax-free gratuity, the bill will also empower it to fix the period of maternity leave through executive order. The Bill seeks to empower the government to fix the period of maternity leave and the tax-free gratuity amount with an executive order.

READ | What is Payment of Gratuity (Amendment) Bill 2017? What are its new provisions?

Meanwhile, following the 7th Pay Commission recommendations, the Department of Personnel and Training (DoPT) through a circular cleared the way for the employees of Indian Railways and their spouses to avail the benefits of Leave Travel Concession (LTC).

Previously, the LTC instructions stated that Indian Railway staff and their spouses were not entitled to LTC as they already had the facility of free pass available to them for travelling in the Railways. The 7th Pay Commission had recommended that they be awarded the benefits of travel concession awarded to other government servants. the DoPT circular read, “The matter has been considered in this department in consultation with Ministry of Railways. It has been decided that Railway employees may be allowed to avail all-India LTC once in a block of four years. The ‘All-India LTC’ will be purely optional for railway employees.”

The DoPT also clarified that railway employees will not be eligible for “Home Town LTC”, and will have to surrender the Privilege Passes (concessional or free tickets) in the calendar year in which they intend to avail the leave travel allowance.

(with inputs from PTI)

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