Gratuity Amount Calculation: Gratuity is given to employees working for a long time in private and government institutions as a financial gift by the organization in return for their service. CA Pradeep Hisaria told Local 18 that to avail the benefit of gratuity, any employee working in any private or government organization must work continuously for at least five years in the same organization.
Benefit of gratuity
If a person leaves the job or changes the organization before completion of five years, 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 working and where ESIC facility is available.
How is the amount of gratuity decided
Pradeep Hisaria said that the amount of gratuity is decided on the basis of the last monthly salary of the employee at the time of retirement. In this, the salary of 15 days of the last month is divided by 26 and then multiplied by the number of years of service. On this basis, the total gratuity amount is determined.
Provision of income tax exemption
He said that the maximum amount of Rs 20 lakh received as gratuity is exempted from income tax. If after completing five years of service, an employee needs money in an emergency situation, he can also get the gratuity amount as a loan. However, its final settlement takes place only at the time of retirement or when the employee leaves the company.