Gratuity is such a scheme which has gone under changes in India years pass by for the benefit of a central government employee. One of those history making changes has been increasing the ceiling of gratuity by 2400%-from ₹1 lakh to ₹25 lakh. This huge increase certainly guarantees financial security for the employees leaving.
What Is Gratuity?
Gratuity is one-time payment to an employee in consideration of the service, rendered for a long time. In general, gratuity payments fall under the Payment of Gratuity Act, 1972 that prescribes the work period and other conditions of minimum five continuous service years for an employee converted towards the availing of gratuity. The amount of gratuity is calculated as per the last drawn salary and years of service.
Increase History Of Gratuity
1. Initial limit- ₹1 lakh
There was a time when the payment made towards gratuity of the central government was ₹1 lakh- that appeared pretty fair in its day. And then inflation and all the changes in the cost of living put pressure on the government to change the limits.
2. Raised to ₹3. 5 Lakh in 1997
When the hour changed, the government at that year increased the ceiling of gratuity from ₹1 lakh to ₹3.5 lakh for thousands of retired employees.
3. Hike from 3.5 Lakh to 10 Lakh in 2010
That was the biggest hike, which happened in \(2010\), when the amount of ₹3.5 lakh was increased to ₹10 lakh. Well, this really was a huge relief for the retiring employees.
4. After 7th Pay Commission of 2016: Hiked to 20 Lakhs
This provision rose as a consequence of the enforcement of the 7th Pay Commission, which increased the ceiling of gratuity up to ₹20 lakhs, eventually providing a better standard of living for these pensioners.
5. Expected Revision of 25 Lakhs (Under Consideration for 8th Pay Commission)
However, there is a very strong demand for one more revision of the cap of gratuity to the level of ₹25 lakh, which will most probably be included in the 8th Pay Commission. This huge enhancement will be an overall increase of 2400% from the original ₹1 lakh.
Conclusion
The government is taking steps by increasing gratuity from time to time to secure the financial future of central government employees. These days, in an era of high inflation and costs of living, moving the gratuity amount up to ₹25 lakh is definitely going to ensure a much more respectable retirement life for government employees. If implemented, this is going to do wonders for many government employees, going forward.
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