Need help?? Your guide on Gratuity

Success for the article on PF withdrawal has inspired me to write an article about Gratuity. And obviously this is really important to know as many companies provide this benefit under the umbrella of CTC, but the employee is not aware of, how to get benefit of gratuity.

This article is an attempt to provide insight about Gratuity to those individuals.

“Gratuity” is a reward for the long term service. It’s the benefit that employee gets for sustained loyalty towards the organization and employer.

Eligibility for an Employee:
An “Employee” who has rendered continuous service for more than five years is eligible for “Gratuity” benefit.

Benefit:
Gratuity rewards an employee in a big way. The amount of gratuity will be 15 days pay for every completed year of service. Yes it’s completed years which counts here. So if the person is leaving the company after 6 years and 7 months then he’ll get gratuity for 7 Years and the employee leaving company after 6 years ad 5 months would receive gratuity for 6 years. So keep this thing in mind and then put down your resignation at appropriate time.

The amount is calculated on the Basic Salary + DA , the employee is drawing at the time of exit.

Below is the simple calculation to gauge the amount that you should receive as gratuity.


Gratuity = 15 days salary x Years of service completed

Let me explain you with the example. There’s an employee who’s Basic Salary + DA Comes @ Rs. 30000 P.M. Let’s assume that he served company for 5 years and now leaving the company. He should receive Rs. 15000 (15 days salary) * 5 = 75000 as gratuity amount. Employee is getting this amount as per his salary at the time of exit.

The present maximum limit for gratuity is INR 3.5 lacs.

Gratuity pays towards your long-term commitment and yes it’s good amount which could help you with your investment decisions.

Happy Investing!!