{"id":6028,"date":"2018-06-11T21:57:07","date_gmt":"2018-06-11T16:27:07","guid":{"rendered":"https:\/\/www.antworksmoney.com\/blog\/?page_id=6028"},"modified":"2018-06-11T21:57:26","modified_gmt":"2018-06-11T16:27:26","slug":"when-will-you-get-gratuity-payment","status":"publish","type":"page","link":"https:\/\/www.antworksmoney.com\/blog\/when-will-you-get-gratuity-payment\/","title":{"rendered":"When Will You Get Gratuity Payment?"},"content":{"rendered":"

Gratuity payment is a lump sum that your company will pay you as an acknowledgement of your loyalty to the company. Naturally, gratuity becomes payable only after you have spent a certain number of years with the company. You will receive this benefit either at the\u00a0time of retirement\u00a0or when you resign from employment. Let us take a look at how gratuity benefit is paid.<\/p>\n

There are two conditions that must be satisfied in order to be eligible to get your gratuity benefit:<\/p>\n

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  1. The company you work at has a minimum of 10 people on its\u00a0payroll, i.e., at least 10 employees receiving salaries from the organisation. Note that people on contract are not considered.<\/li>\n
  2. You have completed at least 5 years with the organisation. If an employee dies during the tenure of his employment, the 5-year rule is relaxed. So, even if such an employee\u2019s period of service is as little as 1 year, he\/she will be eligible to receive gratuity if the first condition is met.<\/li>\n<\/ol>\n

    Calculation of the amount of gratuity payable<\/strong><\/h2>\n

    According to the law, the amount payable as gratuity is equivalent to half month\u2019s salary for every full year of your employment or Rs. 10 lakhs, whichever is lower. This is the minimum amount payable by law. Some companies may even pay a higher amount. This upper limit depends upon the company\u2019s policy. For example, if you have put in 10 years of service before you resign from the company, you are entitled to an amount equal to 5 month\u2019s salary or Rs. 10 lakhs, whichever is lower.<\/p>\n

    However, if your company has a policy to pay its employees a maximum of Rs. 20 lakhs as gratuity, then the amount payable to you when you resign after 10 years of completed service will be an amount equal to 5 month\u2019s salary or Rs. 20 lakhs, whichever is lower.<\/p>\n

    Your last paycheck before you retire or resign is the amount you should consider in your gratuity computation. Also, only your \u2018Basic\u2019 and \u2018Dearness Allowance \/ DA\u2019 should be taken into consideration.<\/p>\n

    Tax treatment for gratuity<\/h2>\n

    The amount of gratuity received by a person is taxed as salary income under the head \u2018Income from salaries\u2019 on the income tax return. If you are a government employee, then according to the provisions of Section 10 (10) of the\u00a0Income Tax\u00a0Act, the gratuity amount paid is completely tax-free.<\/p>\n

    Gratuity amounts received by non-government\u00a0employees covered by the Payment of Gratuity Act is tax-free up to the least of the following amounts:<\/p>\n