Gratuity Withdrawal Rules: If you do a job then you need to know what is gratuity. Because it is the reward given to the employees by the company. In simple words, gratuity is a reward for working for a long time in the company, which is given under a fixed formula.
It also has many advantages. In such a situation, it should be known how gratuity is calculated. Also what are its benefits. What are the rules regarding Gratuity? Also, is gratuity available before 5 years?
What is Gratuity?
Gratuity is that part of your salary that the company gives in return for your years of service. Gratuity Rule is a beneficial scheme that is part of the retirement benefit and is given by the company to the employee on leaving the job. However, for this it is necessary that you have worked continuously for 4 years, 10 months and 11 days in a company. That is, if you are fond of changing jobs twice a year, then you will not get gratuity.
Gratuity is received before 5 years?
Under the Payment of Gratuity Act, 1972, any person who has worked in a company for 5 years becomes eligible for gratuity withdrawal rules. The employee does not get gratuity before a period of 5 years.
Calculation of gratuity
[(Basic Pay of last month + DA) x 15 x years in service] / 26
If you look at the Gratuity Rule, it will look a bit difficult. So let’s understand it in simple language. For example, you have worked in a company for 21 years and 11 months. Your last basic salary was Rs.22,000. On this you used to get dearness allowance of Rs 24,000. First of all, understand that here your job will be considered for 22 years.
Then you will add the sums of 22,000 and 24,000. From these you will get an amount of 46,000. Multiplying this amount by 15 will give Rs.6,90,000. Then you will have to multiply this amount by your years of service i.e. 22 and now you will get an amount of Rs.1,51,80,000. Now in the end, if you divide this amount by 26, then you will get Rs.583846. That is, your gratuity amount (gratuity withdrawal rules) is Rs 583846.
Is gratuity tax free?
Under the Payment of Gratuity Act, 1972 (Payment of Gratuity Act, 1972), the benefit of gratuity is available to every employee of the company where more than 10 people work. Any company can give a maximum amount of Rs 20 lakh to its employee as gratuity withdrawal rules. The special thing is that the amount received as Gratuity Rule is tax free. This rule applies to both government and private jobs.
