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Gratuity Amount Calculation: Gratuity is a financial benefit that employees who serve continuously for five years. This benefit is applicable in the same institutions where there are 10 or more employees. At the time of retirement …Read more
CA Pradeep Hisaria giving information
Highlights
- To get the benefit of gratuity, work in the same company is necessary for 5 years.
- The amount of gratuity is fixed on the basis of final monthly salary.
- The maximum amount of gratuity up to Rs 20 lakh is tax free.
Koderma. Employees working for a long time in private and government institutions are given gratuity as a financial gift by the institution in exchange for their service. CA Pradeep Hisaria told in a conversation with Local 18 that the employee working in any private or government institution is required to work in the same institution for a minimum of five years to take advantage of gratuity. If a person leaves the job before the completion of five years or the institution changes, then he does not get the benefit of gratuity.
He said that the benefit of gratuity is available in those institutions where 10 or more employees are employed and where ESIC facility is available.
How the gratuity is decided
Pradeep Hisaria said that the amount of gratuity is decided on the basis of the last monthly salary of the employee’s retirement time. In this, the salary of 15 days of the last month is multiplied by 26 and the years have been served. Based on this, the total gratuity amount is determined.
Provision for income tax exemption
He informed that a maximum amount of up to Rs 20 lakhs received in the form of gratuity comes under the purview of exemption from income tax.
Gratuity can also be found in the form of loan
If after completing five years of service, the employee needs money in a casual situation, then he can also get the gratuity amount as a loan. However, its final settlement is only at the time of retirement of the employee or leaving the company.