The Payment of Gratuity (Amendment) Act, 2009 & 2010

Payment of Gratuity (Amendment) act, 2009 – amendment in section 2 and insertion of section 13A

An Act to further amend the Payment of Gratuity Act, 1972.

Be it enacted by Parliament in the Sixtieth Year of the Republic of India as follows:—

 Short title and commencement

1. (1) This Act may be called the Payment of Gratuity (Amendment) Act, 2009.

(2) It shall be deemed to have come into force on the 3rd day of April, 1997.

2. In the Payment of Gratuity Act, 1972 (39 of 1972) (hereinafter referred to as ‘the principal Act’), in section 2, for clause (e), the following clause shall be substituted, namely:—

‘(e) “employee” means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;’.

3. After section 13 of the principal Act, the following section shall be inserted, namely:—

“13A. Validation of payment of gratuity – 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.”.

Gratuity Act 2010 wef 24.05.10 limit 10 lakh Notified

Date of enforcement of Payment of Gratuity (Amendment) Act, 2010

Notification No. S.O. 1217(E), dated 24-5-2010

In exercise of the powers conferred by sub-section (2) of Section 1 of The Payment of Gratuity (Amendment) Act, 2010 (15 of 2010), the Central Government hereby appoints the 24th day of May, 2010, as the date on which the said Act shall come into force.

Gratuity Amount payable under Payment of Gratuity Act enhanced from Rs.3.5 lakhs to Rs 10 lakhs

Payment of Gratuity (Amendment) Act, 2010 (No. 15 of 2010), dated 17-5-2010

An Act further to amend the Payment of Gratuity Act, 1972.

Short title and commencement.

(1) This Act may be called the Payment of Gratuity (Amendment) Act, 2010.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Amendment of section 4 of Act 39 of 1972.

2. In section 4 of the Payment of Gratuity Act, 1972, in sub-section (3), for the words “three lakhs and fifty thousand rupees”, the words “ten lakh rupees” shall be substituted.

Tax Liabilty on Gratuity

As per Income Tax act ,Section 10(10),employees has been divided in three categorise.

Employee of Central/State Government and Local bodies :Gratuity received by these employees is fully exempted without any limit.

Employee covered under Payment of Gratuity Act: Amount received as per Gratuity Act is fully exempted .Means Income Tax has not defined /set any Limit for such employees.Means as soon as the amount of Gratuity Act ,enhanced  ,Income tax Limit will also enhanced.As the income Tax act only refer the Payment of gratuity act .

Other employee:For other remaining employee Limit is defined under the Income Tax act ,which is at present 3,50000.But many PSU ,which is not covered under the Sate or Central Govt definition as per sr number 1 and 2 above ,has started to pay ,gratuity as per Sixth pay commission ,maximum up to 10 lakh .So amount in excess of 3.5 lakh is taxable in hand of such employees .As the Limit is enhanced in Payment of Gratuity Act as per sr number 2 even then separate notification under this sub clause [10(10)(iii)} is required .The Limit is related to date of retirement /resignation and not to date of receipt.Update :Govt has enhanced the exemption limit for person retired after 24.05.2010 read more from here . .

Now PSU employees are getting Gratuity at 10 lakh Rs after tax deduction after Maximum cieling of 3.5 lakh .As the Limit of income tax exemption has been increased in case of Govt employee as well as for employees covered under payment of Gratuity act ,Limit for PSU employee should also be increased .I request to All PSU employees to raise their voice against this issue.