Gratuity Act, amendment, eligibility, abstract, and benefits

Gratuity is the amount an employee receives after he/she discontinues services. To be eligible for gratuity, individuals are required to be employed under the same employer for 5 or more. 

You can calculate your gratuity using a formula. The gratuity formula is different for employees covered under the Gratuity Act and for employees who are not covered. For employees who are covered, the formula is (15 X monthly wage X working tenor) / 26 and for employees who are not covered under the Gratuity Act, the formula is (15 X monthly wage X working tenor) / 30. 

If you have served more than 6 months, the next year will be calculated for your gratuity. For instance, if you have served for 14 years 8 eight months your working tenor will be calculated as 15 year. 

To be eligible to draw gratuity, you will have to be eligible for superannuation. In case of death or disability due to accidents or illness, the gratuity amount will be paid to your legal heirs or your appointed nominee. 

You can also invest the funds in investment schemes like a fixed deposit to yield substantial returns. 

Lastly, the tax exemptions limit for gratuity has been raised from Rs. 20 Lakh to Rs. 30 Lakh. In the case of Government employees, the gratuity amount is non-taxable.

Also, Read: Gratuity Calculation, Gratuity Formula, Rules & Eligibility