The decision will bring the private sector employees at par with the government employees in terms of gratuity benefits.
The gratuity limit of the Central government employees have already been raised by the Sixth Pay Commission recommendation.
Amendment to the gratuity Act will be made by the government after the bill is tabled in the current session of Parliament.
A raise in the gratuity limit at the time of retirement came following repeated appeals by the employees' groups.
Earlier, Labour and Employment Minister Mallikarjun Kharge said that the consultation with various stakeholders is being held to come to an understanding over raising the ceiling.