Gratuity – Eligibility, Calculation and All You Need to Know About!

Gratuity is a benefit received by employees as a token of appreciation for their service to the organization. It acts as a form of financial security, offering a lump sum to employees when they leave their job after a specified period. Here in this blog, we’ll explore the essential aspects of gratuity, from eligibility and calculation methods to tax implications and practical examples.

What is Gratuity?

Gratuity is a monetary benefit provided to employees as per the Payment of Gratuity Act, 1972. It is offered by employers as a gesture of gratitude for an employee’s service tenure with the organization. The gratuity amount is generally disbursed at the time of retirement, resignation, or in unfortunate events like death or disability.

Eligibility Criteria for Gratuity

• Employees become eligible for gratuity if they meet the following conditions:
• They must have completed at least 5 continuous years of service in the organization.
• They qualify if they resign, retire, or face a disability due to an accident or illness.
• In the case of death or disability, gratuity is payable to the nominee or heir of the employee, even if they haven’t completed five years of service.

To read further Click Here!