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Gratuity Amt not covered.

07 September 2019

Sir,
please tell me what is the maximum exempt amount for gratuity , when the person is not covered in the gratuity act...
because , if covered, it is 20,00,000/-

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7 Replies

Pranav Aggarwal (469 Points)
Replied 07 September 2019

20,00,000 same

if enterprises is not covered under gratuity act

Alok Singh (209 Points)
Replied 07 September 2019

but singhania ki book me hai ki abhi it is likely to be increased

Pranav Aggarwal (469 Points)
Replied 07 September 2019

in RTP of CA intermediate it has been increased

Mulla kalesh (10 Points)
Replied 07 September 2019

if a person not covered the limit 2000000

Suresh Thiyagarajan (Student) (3986 Points)
Replied 07 September 2019

1. There is no clear explanation or notification relating to an exemption in relation to the payment of gratuity for employees who are not covered under the act.
2. It is a well-known fact that exemption limit u/s 10(10) has been increased from Rs. 10 lakhs to Rs. 20 lakhs effective from 28th March 2018. However, as per sec 10(10), this exemption covers only those employees who are covered under "The Payment of Gratuity Act 1972".
3. However, the then Law Minister has said that exemption limit will equally be applicable to employees who are not covered under the act.
4. The above statement contradicts with the Income-tax act and still, there is no clear explanation on the same as most of the employees are covered under the act.
5. Make sure to consult an expert on this issue.
Please correct me if the above solution has an alternative view.

Alok Singh (209 Points)
Replied 07 September 2019

you are right sir, that is why i asked this question

2 Like

Kapadia Pravin (17249 Points)
Replied 07 September 2019

The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons.

Considering the inflation and wage increase even in case of employees engaged in private sector, this Government decided that the entitlement of gratuity should also be revised in respect of employees who are covered under the Payment of Gratuity Act, 1972.

Accordingly, the Government initiated the process for amendment to Payment of Gratuity Act, 1972 to increase the maximum limit of gratuity to such amount as may be notified by the Central Government from time to time.

Now, the Government has issued the notification specifying the maximum limit to Rs. 20 Lakh.