Gratuity Limit Exceeding 3.5 Lakh: What Are the Rules and Where to Find Them?

Hi all,

What is the maximum limit of gratuity if it exceeds 3.5 lakh? Can anyone provide me with a link or the rules?

Regards,
Surrender Negi

Question is not clear; however, I would still try to answer. The tax limit for gratuity is calculated as the minimum of the following heads:

1. 15 days' salary, based on the last drawn salary, for each completed year of service
2. Rs. 3,50,000/-; or
3. The gratuity actually received.

Based on this, you can probably suggest to employees and create your reference. The minimum period served should not be less than 5 years. You can relax this 5-year period, though, only as an employee-friendly policy, and you will not be found in contravention of the law.

Also, please follow the minimum gratuity percentage to be kept aside from the employee's salary and the employer's contribution to the same.

Hi All,

The last drawn full gross salary determines when the gratuity matures for each completed year of service. There are no limitations for that.

Regards,
Athar Hashmi

After the completion of 5 years of service, only then will you be entitled to receive the benefit of Gratuity, subject to completing 240 days in a year.