There are certain circumstances which lead to the payout of gratuity. An employee receives gratuity in case of any unfortunate incident that occurs. If the employee faces any unfortunate incident that may result in death or disability, then the employer has to pay gratuity.
Earlier, the limit to
gratuity was up to 10 lakh, as this amount is entitled to exemption from tax. In accordance with the changes in the government's new rules, the amount has been increased to 20 lakh. Now, the employee can receive 20 lakh as the maximum payout amount without any tax levied. In case of the employee’s death, the first nominee enlisted by the employee is entitled to receive the amount. However, it is imperative to note that any amount registered beyond 20 lakh will be subject to tax.