Gratuity rules: If you have worked in a company for five years and you think that you will get gratuity, then this is your misconception. It is not necessary that you will get gratuity. Now in some cases, gratuity will not be given at all. The Supreme Court has recently given an important decision, which has brought a big change in the rules between employees and employers.

On 17 February 2025, the Supreme Court ruled that under the Gratuity Act 1972, a criminal conviction is no longer necessary to confiscate an employee’s gratuity. If an employee is fired on the grounds of “moral turpitude”, his gratuity can be stopped. For this, there is no need to prove the crime in court. Moral turpitude means doing any immoral, wrong or fraudulent act or committing fraud.

Earlier, the 2018 Supreme Court judgment (Union of India vs. Ajay Babu) stated that it is necessary to prove the crime in court to stop gratuity. But after this new judgment, the 2018 judgment will no longer be applicable. If an employee is fired on the grounds of moral turpitude, the company can stop his gratuity.

The employee gave the wrong date of birth.

According to the Economic Times report, in this latest case, an employee hid his real date of birth. He had shown the date of birth as 1960 instead of 1953. Because of this, he got the job for 22 years. When this lie was discovered, he was fired from the job and his gratuity was stopped. The court said that if the employee had told the correct date of birth in the beginning, he would not have got the job.

In this case, an employee got a job by giving a false date of birth and worked in a public sector company for 22 years. When this fraud came to light, the company fired him and stopped his gratuity, although no criminal case was filed against him. The Supreme Court held that such fraud is ‘moral turpitude’ and criminal punishment is not necessary for stopping gratuity.

However, the Supreme Court also said that employers must follow the principles of natural justice when withholding gratuity. This means that the employee must be given a chance to present his case, and the employer must adopt a sympathetic approach. For example, in this case, the Supreme Court ordered that 75% of the employee’s gratuity be returned to him and only 25% be withheld.

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If you are also employed then you will also be interested to know about the ways of saving tax. The salary structure of many people is such, in which there is no provision of tax free allowance. Even if your income tax liability is low, you can reduce it further by adopting some alternative ways of saving tax. Do you know that your employer can help you save tax by contributing to NPS on their behalf, if they so desire? Yes, if you do not know about this, then we are giving you information about this in detail.

Employee’s own contribution to his NPS account is eligible for deduction under section 80CCD(1) and not under section 80C. The limit of Rs 1.50 lakh is prescribed under section 80CCE which covers all items eligible for deduction under section 80C, 80CCC and 80CCD(1).

Know what are the rules

Deduction under section 80CCD (2) is made available to the employee in relation to the employer’s contribution to the employee’s NPS account. This deduction is given up to Rs 1.50 lakh, which is under section 80C, 80CCC and 80CCD(1). At the same time, deduction of up to 10 percent of the basic salary and dearness allowance of the employee is available under section 80CCD (2). Higher deduction of up to 14 per cent of contribution is available as a percentage of basic pay for Central and State Government employees.

Although there is no limit for deduction in respect of employer’s contribution to the NPS account of an employee under section 80CCD(2), section 17(2) of the Income-tax Act provides that the total amount of the employer’s contribution to the employee’s provident fund is In case of contribution, National Pension System and superannuation exceeds 7.50 lakh in a year, the excess in the hands of the employee will be taxed as perquisite.

In addition to the deduction up to Rs 1.50 lakh in NPS account, all taxpayers can avail additional deduction of up to Rs 50,000 under section 80CCD (1B). In total, you can contribute up to Rs 2 lakh to your NPS account and get the benefit of tax deduction.

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