When you get a job, you get a salary every month, and you are also entitled to many other benefits. These include EPF, Insurance, Mediclaim, and Gratuity. All have their benefits. The rules and regulations related to them are also different. If you are employed or are going to join soon, then you need to know about these benefits. Here we are talking about gratuity. You can understand every important thing related to gratuity.

Your company gives you a good amount in the form of gratuity payment at the time of retirement. The company gives you this amount even if you leave the job. The condition for this is that your job in the company should not be less than 5 years. Government employees also get the benefit of gratuity (Central government employees gratuity). This is a reward for working for a long time. If you have worked in the same company for more than 20 years, then you get a good amount in the form of gratuity on retirement.

If 10 or more people work in a private or government company, then it is necessary for the company to give gratuity benefits to all the employees. Apart from the company, shops, mines, factories come under the purview of this rule. The government has made this rule so that after years of service, the employee gets a good amount to fulfill his responsibilities at the time of retirement.

If an employee dies during the job, then the entire amount deposited in his gratuity account is given to his nominee. In such a case, the condition of working for at least 5 years does not apply.

The Gratuity Act was implemented in 1972. It was started to give a good lump sum amount to the employees on retirement. It is an important part of the job related benefits. But people, especially private sector employees, do not give much importance to it. The reason for this is that they change jobs frequently.

There is a formula (Gratuity calculation formula) to decide the amount of gratuity. According to the Gratuity Act 1972, 15 days salary for every year of job is made for gratuity. This formula is: Salary * Years of job * 15/6. Here salary means basic salary and DA (Dearness allowance). 15 means the days of every month for salary. 26 means the working days of every month.

The limit of amount for gratuity (Gratuity increased upto 20 lakh rupees) for private sector employees has been increased to Rs 20 lakh. They will not have to pay tax on this money. The amount received by government employees under gratuity is already tax-free.

There is also a formula to decide how many years you have worked in a company. This can be understood by an example. Suppose an employee has worked in a company for 6 years and 9 months, then the period of employment will be considered as 7 years for gratuity (Gratuity eligibility and rules). Similarly, if an employee has worked for 5 years and 4 months, then his period of employment will be considered as 5 years.

Is the amount of gratuity (Gratuity meaning) deducted from your salary every month? Some companies deposit the amount of gratuity from themselves in the employee's account, while some companies deduct this money from the monthly salary of the employee.