If the amount of gratuity payable under the section is not paid by the employer within the period specified, it will have to pay simple interest on it from the date on which the gratuity becomes payable at the rate not exceeding the rate stipulated by the federal government. Gratuity should be paid in cash or, if so desired by the payee, by demand draft or bank check to the eligible employee, nominee, or legal heir.
In order to forfeit gratuity of an employee, there must be a termination order containing charges as established to the effect that the employee was guilty of any of the aforesaid misconducts.
In one case, it has been held that in the absence of a termination order containing any of the above allegations, the gratuity of an employee cannot be forfeited. This article was first published on China Briefing. As a full-service consultancy with operational offices across China, Hong Kong, India, and ASEAN, we are your reliable partner for business expansion in this region and beyond.
So, if an employee completes 4 years and 6 months of continuous service in the same establishment, he is eligible to get gratuity as per the Payment of Gratuity Act There is also a judgment by the Madras High Court which says that there is the eligibility for the gratuity of an employee who completes 4 years and days of service. But it is advisable to follow what has been prescribed in the law. Gratuity Calculation Below, we also tell you how to calculate your gratuity amount.
Imagine that you worked with XYZ company for a period of 10 years. Your last drawn basic salary along with dearness allowance was Rs Note that the time period of service is rounded-off for gratuity calculation. For example, you have worked with the XYZ company for a period of 15 years. Your last drawn basic salary along with dearness allowance was Rs 30, As per the Gratuity Act, the amount of gratuity cannot be more than Rs 20 lakh. Any excesses would be treated as ex-gratia. If the number of years you have worked in the last year of employment is more than six months, then it will be rounded to the nearest figure.
Suppose your tenure of service is 16 years 7 months, then you receive the gratuity for 17 years. Otherwise, its for 16 years if it happens to be 16 years 4 months. For example, you have a basic salary of Rs 30, You have rendered continuous service of 7 years and the employer is not covered under the Gratuity Act. The ClearTax Gratuity Calculator is an easy-to-use generic tool, where you enter the basic salary and the years of service. It gives you an estimate of the gratuity you would receive, after five or more years of continuous service.
The gratuity calculator shows you the gratuity figures in seconds. It helps you plan your finances by investing the gratuity in a smart manner, for a maximum return. You can use the gratuity calculator from the comfort of your home or practically anywhere to get the gratuity amount. The tax treatment of the gratuity amount depends on the type of employee who has to receive the gratuity. For example, your employer had paid you a gratuity of Rs 12 lakh.
As per the gratuity calculation in the earlier example, you are eligible for a gratuity amount of Rs 2,59, The government has set Rs 20 lakh as the upper tax-free limit. The lowest of the three figures is Rs 2,59,, which is exempt from tax. You must pay tax on the remaining amount of Rs 9,40, as per your income tax slab. You are now subscribed to our newsletters.
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