Dear team, I have worked for 1st June 2015 to 3rd Jan 2020 in organization 5 days week. Whether I am eligible for gratuity?
From India, Bengaluru
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From India, Bengaluru
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If your employer is covered under the Payment of Gratuity Act, 1972 then of course you are entitled to have gratuity amount from your employer. R N KHOLA
From India, Delhi
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450From India, Delhi
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You are not eligible as per as Payment of Gratuity act. You must complete 5 year service of dated of the join.
From India, Mumbai
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From India, Mumbai
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Gratuity Overview
Gratuity is a benefit received by an employee for services rendered to an organization. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee receives gratuity when they resign, retire, or are laid off. In case of death or disablement, there is no minimum eligibility period.
How Gratuity is Calculated
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26. According to this formula, a time period of over six months or more is considered as one year. This means if you have completed five years and seven months of service, the number of years would be considered as six years for the calculation of gratuity benefit. On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years. An employer can, however, give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended an increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, the entire amount of gratuity received on retirement or death is currently exempted from income tax. In the case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not. For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is the least of the following:
- The maximum amount specified by the government, which is currently Rs. 10 lakh
- Last drawn salary X 15/26 X years of service
- Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr. Ashish is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh, but suppose he has actually received a gratuity of Rs. 12 lakh. So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. Mr. Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).
From India
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Gratuity is a benefit received by an employee for services rendered to an organization. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee receives gratuity when they resign, retire, or are laid off. In case of death or disablement, there is no minimum eligibility period.
How Gratuity is Calculated
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26. According to this formula, a time period of over six months or more is considered as one year. This means if you have completed five years and seven months of service, the number of years would be considered as six years for the calculation of gratuity benefit. On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years. An employer can, however, give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended an increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, the entire amount of gratuity received on retirement or death is currently exempted from income tax. In the case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not. For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is the least of the following:
- The maximum amount specified by the government, which is currently Rs. 10 lakh
- Last drawn salary X 15/26 X years of service
- Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr. Ashish is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh, but suppose he has actually received a gratuity of Rs. 12 lakh. So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. Mr. Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).
From India
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Dear Anamik, First of all, your sentence is incorrect. How can you claim to have worked from 1st June 2015 to 3rd January 2020 when we are currently in December 2019? Strictly speaking, you are not eligible for gratuity as per the provisions of the Payment of Gratuity Act 1972 since you have not completed 5 years of continuous service. Some courts have issued judgments to pay gratuity when the employee has completed continuous service of 4 years and 180 days, or 4 years and 240 days for a 5-day week and 6-day week, respectively. However, these are individual cases, as the Act has not been amended yet. In your case, the above is not applicable as you do not meet the criteria mentioned.
Regards, Suresh
From India, Thane
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Regards, Suresh
From India, Thane
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc