Gratuity: RBE No.104/2004 – Interest Payable on Delayed Payments
No.E(LL)86/AT/GRA/1-2 Part-II, dated 21.05.2004
Sub: Rate of interest payable on delayed payments of Gratuity under the Payment of Gratuity Act, 1972 applicable to Casual Labours of Railways.
Attention is drawn to Section 7(3)(A) of the Payment of Gratuity Act which provides that if the amount of gratuity payable under Sub-section (3) is not paid by the employer within the period specified in Sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits, as that Government may, by notification specify.
The issue regarding rate of interest payable on delayed payment under the Payment of Gratuity Act, 1972 was raised in the PNM meeting. The matter has been examined in consultation with the Ministry of Labour.
It has been advised that as per the notification No.SO-874 (E), dated 01.10.1987 (copy enclosed), the simple interest on delayed payment of gratuity under the Gratuity Act, 1972 has been specified as 10% per annum. In view of the fact that there has been no subsequent revision/ change made in rate notified by the Ministry of Labour, the existing simple interest rate i.e. 10% per annum would continue to be applicable on the Railways where the Railways are liable to pay interest on account of delayed payment of gratuity under the Act.
Ministry of Railways desires that payment of gratuity under the payment of Gratuity Act, 1972 wherever due may be paid in time so that the requirement of paying interest on delayed payment of gratuity can be avoided.
This issues in consultation with the Finance Directorate of this Ministry.
NOTIFICATION
S.O. 874 (E), dated 1.10.1987
1. In exercise of the powers conferred by sub-section 3(A) of section 7 of the Payment of Gratuity Act, 1972 (39 of 972), the Central hereby specifies ten per cent per annum as the rate of simple interest payable for the time being by the employer to his employee in cases where the gratuity is not paid within the specified period.
2. This notification shall come into force on the date of its publication in the official Gazette.
Download Railway Board Circular RBE No.104/2004
Forward reference ⇒ RBE No.