Retirement or Resignation: Gratuity is your right! What to do to get it and how much will you get?

News India Live, Digital Desk: Do you know that the company you have worked for years gives you a special amount when you leave a job or retire? This Gratuity They say. This is not just a rule, but your long tenure, loyalty and hard work. Many people do not either know about this money, or do not understand how it is calculated correctly. But this can be an important part of your financial plan.

Come, today we understand everything about this special reward:

What is gratuity? This is the honor of your long term

Gratuity is the lump sum amount that gives an employer as a thanks to his employee for his services. This is a legally compulsory payment under the “Payment of Gratuity Act, 1972” (Payment of Gratuity Act, 1972), provided the employee fulfills certain conditions.

Who is entitled to this gift? Learn your ability like this:

Not every employee entitled to gratuity. There are some conditions for this:

1. 5 years of continuous service: The most important condition is that the employee has completed at least 5 years of continuous service in the same company. This includes retirement, resignation, layoff or ending job.

2. Death or disability: If an employee dies during service or he becomes disabled, he does not need to fulfill the condition of 5 years of service. In this situation, the amount of gratuity is given to his nominee or legal heir.

How many gratuity will you get? This is how easy calculations:

Gratuity is calculated on a certain formula. It depends on the years you serve and your final salary:

Gratuity = (last salary / 26) * 15 * Total year of service

Come, let us make it a little easier:

• Last salary: This includes your final basic salary (basic salary) and dearness allowance.

• 26: This is the number of days of the month that is calculated to work (by removing the holidays).

• 15: It represents a 15 -day salary for every year’s service.

• Total years of service: If you have worked for 4 years 7 months, it will be considered 5 years. But if it has worked less than 4 years 6 months, then it will be counted only 4 years.

For example: If your last salary (Basic + Da) is ₹ 50,000 and you have worked 10 years 8 months (which will be counted 11 years), then you will have gratuity:
(50,000 / 26) * 15 * 11 = ₹ 3,17,307.69

Remember: Maximum limit of gratuity ₹ 20 lakhs Is. That is, if your calculation comes more than this amount, you will still get a maximum of ₹ 20 lakh.

Does gratuity be taxed? Learn rules:

Whether or not gratuity is taxed, it depends on what kind of employees you are:

• Government Employees: Full amount of gratuity received to central or state government employees Tax-free it occurs.

• Private sector staff (who fall under the Act): The gratuity amount for them is somewhat tax-free. The tax exemption limit is timely decided by the government (currently ₹ 20 lakh).

• Private sector staff (who do not come under the Act): For these, gratuity is tax-free to a certain extent.

Why is this for you?

Gratuity is not just a rule, but a financial fruit of your hard work. This can become a major support after retirement or between two jobs. This gives you financial protection and encourages employers to keep the employees with them long.

So, keep an account of your service years and know that when you complete your job, how much respect and money will you get in exchange for your hard work!

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