Gratuity Amount Calculation: Govt and private, everyone gets ‘gratuity’, but the conditions are strict! Most of the employees don’t know this rule

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Gratuity Amount Calculation: Gratuity is a financial benefit that employees get after serving continuously for five years. This benefit is applicable only in those institutions where there are 10 or more employees. At the time of retirement, a…

Employees working for a long time in private and government institutions are given gratuity as a financial gift by the institution in return for their service. CA Pradeep Hisaria told Local 18 that to avail the benefit of gratuity, an employee working in any private or government institution must work continuously for at least five years in the same institution. If a person leaves the job or changes the institution before the completion of five years, he does not get the benefit of gratuity.

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He said that the benefit of gratuity is available in those institutions where 10 or more employees are working and where ESIC facility is available.

How is the amount of gratuity decided?

Pradeep Hisaria said that the amount of gratuity is decided on the basis of the last monthly salary of the employee at the time of retirement. In this, the salary of 15 days of the last month is divided by 26 and then multiplied by the number of years of service. On this basis, the total gratuity amount is determined.

Provision of income tax exemption:

He said that the maximum amount of Rs 20 lakh received as gratuity is exempted from income tax.

Gratuity can also be availed in the form of loan.

If an employee needs money in an emergency situation after completing five years of service, he can also avail the gratuity amount in the form of loan. However, its final settlement takes place only at the time of retirement or when the employee leaves the company.

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