Finance Minister Arun Jaitley said Tuesday the decision to double tax-free gratuity limit to Rs 20 lakh will benefit public and private sector employees.

The government in Budget 2019-20 also announced hiking of tax free gratuity to Rs 20 lakh for employees having service of more than five years.

"Income Tax Exemption for Gratuity under Section 10(10)(iii) of the Income Tax Act has been enhanced to Rs 20 lakh. Would benefit all PSU employees and other employees not covered by Payment of Gratuity Act," Finance Minister Arun Jaitley said in a tweet.

Parliament last year passed Payment of Gratuity (Amendment) Bill, 2018, enabling the government to raise the limit of tax-free gratuity to Rs 20 lakh and to fix the period of maternity leave qualifying as continuous service period through an executive order.