8th Pay Commission: Gratuity limit will increase from Rs 25 lakh to Rs 75 lakh? Understand the new calculation in simple words

Before the arrival of the 8th Pay Commission, there is a lot of discussion among government employees and pensioners regarding gratuity rules. Different employee organizations and unions have put forward some big demands before the government. They want the maximum limit of gratuity to be increased, the method of calculating it to be changed and the benefits given in case of death while on the job should also be improved.

Let us understand in simple language what is the current rule and what changes are the employee unions demanding from the government.

What is the current rule? (Current Gratuity Rules)

At present, gratuity is given to those government employees who retire after completing at least 5 years of qualifying service (minimum service period). If an employee dies during service, his family receives gratuity at fixed rates.

• Retirement-cum-Death Gratuity = 1/4 (25%) of the employee’s compensation (Basic Pay + DA) for every 6 months of service.
• Under no circumstances can this amount exceed 16.5 times the employee’s salary (Basic Pay + DA).
• Gratuity can be given only up to a maximum of Rs 25 lakh (even if the formula makes the amount more than this).

What changes have the organizations asked for?

Different unions have submitted their memorandums to the government. Their main points are given below:

Indian Railway Technical Supervisors Association (IRTSA) proposal

IRTSA believes that the current rules are inadequate for inflation and today’s times. He has given two big suggestions:

• Limit of Rs 50 lakh: The maximum limit of gratuity should be increased from Rs 25 lakh to Rs 50 lakh.
• New formula: The share received in return for every 6 months of employment should be increased from 1/4 to 1/3 (about 33.3%).
• Benefit on 33 years of service: If someone has worked for 33 years or more, then he gets 32 times the gratuity of his salary (Basic Pay + DA).

IRTSA’s Death Gratuity Proposal

If an employee dies while on the job, he has sought this slab as per service (subject to a maximum of ₹50 lakh):

• Employment less than 1 year: 4 times the basic pay.
• Job for 1 to 5 years: 12 times the basic pay.
• 5 to 11 years of service: 24 times the basic pay.
• Service from 11 to 20 years: 30 times the basic pay.
• More than 20 years of service: Half of the salary for every 6 months of service, subject to a maximum of 50 times.

Proposal of Railway Senior Citizens Welfare Society (RSCWS)

This organization has raised its voice against falling value of money and timely payment:

• In view of the rising level of inflation, the maximum limit of gratuity should be reviewed from time to time.
• As soon as you retire, be sure to receive gratuity money immediately without any paper or administrative delay.
• The rules of gratuity in Old Pension Scheme (OPS), National Pension System (NPS) and Unified Pension Scheme (UPS) should be rationalized so that no one is discriminated against.

NC-JCM (Staff Side) proposal

The employee side of this National Council has put forward the biggest and most important demands:

• He has demanded to directly increase the maximum limit of gratuity to ₹75 lakh.
• Currently the calculation is done on the basis of 30 days of the month. They say that it should be counted on the basis of 25 working days (effective working days), so that government employees do not have to suffer loss compared to other employees covered under the ‘Payment of Gratuity Act’.
• The maximum limit of 16.5 times in the current rule should be removed completely. Unions argue that this limit causes harm to those employees who serve the country for more than 33 years.

How will pensioners and employees benefit from this?

If the government accepts these proposals, then the employees will get a huge lump sum amount at the time of retirement. Especially, there will be a lot of relief to those employees who give long service or who die untimely, because the financial assistance provided to their families will increase to double or triple from before. Now it remains to be seen whether the government gives green signal to which of these demands in the recommendations of the 8th Pay Commission.

The post 8th Pay Commission: Gratuity limit will increase from Rs 25 lakh to Rs 75 lakh? Understand the new calculation in simple words appeared first on Latest.