Whenever it comes to retirement, you must have heard about gratuity. But, do you know what is Gratuity? If you work in an institution for 5 years or more, then you become eligible for gratuity. The company gives gratuity money to an employee after retirement, in the event of leaving the job or in the event of his death. Gratuity money is given to the employee or his nominee. If there is a death or disability of an employee, then in such a situation the condition of 5 years of employment is removed.
If a person has not completed 5 years and has worked for more than 240 days for 4 years, then such employees also become entitled to gratuity. At the same time, there are some companies where there is 6 working days. In such a situation, the employees become entitled to get gratuity only in 4 years 190 days. This calculation is done on the basis of 6 days.
Benefits of Gratuity
This money meets the needs of the employee after retirement and helps his family financially in case of emergency. Gratuity money is given to many government employees through the pension code. In this, the gratuity of Central Government Employees, Defense Personnel, All India Services, Civil Services, Officers of State Administrative Services etc. is calculated according to the Pension Code Rules. If an employee works in a private company, then in such a situation he gets gratuity under the Payment of Gratuity Act 1972. Keep in mind that such employees get 15 days salary as gratuity.
Tax on Gratuity is applicable on this condition
According to the Income Tax rules, no tax is levied on the gratuity money received by the government employees. But, if an employee is getting money under the Payment of Gratuity Act 1972, then you will have to pay tax.