new Delhi. Whether the job is government or private, every employee is very curious about his salary and allowances. Although the trend of changing jobs in the private sector is more, but those who are associated with any one company for a long time also get many benefits. Gratuity is one such benefit.
Gratuity is given in return for working with an employer or company for a certain period. There are certain rules regarding the payment of gratuity. There are also rules of its taxability. If this amount is paid to a number of employees, it is tax-free, but there is no uniformity.
Though gratuity is a part of one’s salary, but unlike PF, it is not deducted from the salary, which means that the employees are not required to contribute towards it.
Payment of Gratuity in 3 situations
When an employee has completed at least 5 years of continuous service. However, if the company is following a work schedule of 5 days a week, then at least 4 years 190 days of service is necessary for the payment of gratuity. If the company is adopting a 6 days a week schedule, then at least 4 years 240 days of service is necessary.
Gratuity amount can be withdrawn even after attaining 60 years Gratuity amount can be
withdrawn even after attaining the age of retirement i.e. 60 years. If an employee dies or becomes disabled due to an accident or disease, he is still eligible to withdraw the amount of gratuity before completion of 5 years. Also, may be eligible for gratuity even after resigning or retiring from the present employment. However, temporary workers or interns are not eligible for gratuity.
Provision of tax exemption under income tax rules
The entire amount of gratuity received comes under the ambit of tax exemption. There is a provision of tax exemption under income tax rules, but there is a big difference in the tax exemption limit for government and private sector employees. Gratuity up to Rs 20 lakh is tax free for a government employee. Whereas, gratuity up to Rs 10 lakh for a private employee is tax free.
