know about Gratuity for Gujarat government employees
If you're a Gujarat government employee, you may be eligible for gratuity upon retirement, resignation, or death. Gratuity is a form of monetary benefit provided to employees as a token of appreciation for their years of service. In this blog post, we'll discuss everything you need to know about gratuity for Gujarat government employees.
What is gratuity?
Gratuity is a lump sum amount paid to employees as a token of appreciation for their years of service. It is a form of retirement benefit provided to employees upon their retirement, resignation, or death. The amount of gratuity paid depends on the employee's length of service and their last drawn salary.
Who is eligible for gratuity?
All Gujarat government employees who have completed at least 5 years of continuous service are eligible for gratuity. The gratuity amount is calculated based on the employee's last drawn salary and the number of years of service completed.
How is the gratuity amount calculated?
The gratuity amount is calculated using the following formula:
Gratuity = (Last drawn salary x 15 x No. of years of service)/26
In this formula, the last drawn salary refers to the basic salary plus dearness allowance, if any. The number of years of service refers to the total number of years the employee has worked with the Gujarat government.
For example, if an employee's last drawn salary was Rs. 50,000 and they had worked with the Gujarat government for 20 years, the gratuity amount would be:
Gratuity = (50,000 x 15 x 20)/26 = Rs. 5,76,923.08
When is the gratuity amount paid?
The gratuity amount is paid to employees upon their retirement, resignation, or death. In the case of retirement or resignation, the employee must apply for the gratuity amount at least one month before their last working day. The gratuity amount is typically paid within 30 days of the employee's retirement, resignation, or death.
Is gratuity taxable?
Yes, gratuity is taxable under the Income Tax Act. However, there is a tax exemption limit for gratuity. The exemption limit is Rs. 20 lakhs for government employees and Rs. 10 lakhs for private sector employees. Any amount received as gratuity above these limits is taxable.
In conclusion, gratuity is a form of monetary benefit provided to Gujarat government employees as a token of appreciation for their years of service. The gratuity amount is calculated based on the employee's last drawn salary and the number of years of service completed. To be eligible for gratuity, an employee must have completed at least 5 years of continuous service. The gratuity amount is typically paid upon retirement, resignation, or death and is taxable under the Income Tax Act.
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Gratuity is a benefit received by an employee for services rendered to an organisation. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee gets gratuity when he/she resigns, retires or is laid offIn case of death or disablement there is no minimum eligibility period.How Gratuity is Calculated.
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
This means if you have completed five years and seven months of service, the number of years would be considered as six years for calculation of gratuity benefit.
On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years.
An employer can however give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, entire amount of gratuity received on retirement or death is currently exempted from income tax.
In case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.
For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is least of the following:
Maximum amount specified by the government which is currently Rs. 10 lakh
Last drawn salary X 15/26 X years of service
Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr Ashish, for example, is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh but suppose he has actually received gratuity of Rs. 12 lakh.
So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. So Mr Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).
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ગ્રેજ્યુઈટી શું છે? ગ્રેજ્યુઈટીની ગણતરી કઈ રીતે કરવી ? તે માટે ઉપયોગી માહિતી જાણવા માટે અહી ક્લિક કરો
know about Gratuity
Gratuity is a form of financial benefit that is provided to an employee by their employer. It is a sum of money that is paid to an employee as a form of gratitude for their services to the company. Gratuity is usually paid out when an employee retires or resigns from their position, and it is calculated based on the number of years that the employee has worked for the company.
In India, gratuity is governed by the Payment of Gratuity Act, 1972. According to this act, an employee who has completed five years of continuous service in an organization is eligible to receive gratuity. The gratuity amount is calculated based on the employee's last drawn salary and the number of years they have worked for the company.
The formula for calculating gratuity is as follows:
Gratuity = (Last drawn salary x number of years of service x 15)/26
In this formula, the last drawn salary refers to the basic salary plus dearness allowance, and the number of years of service refers to the number of years the employee has worked for the company. The number 15 represents 15 days of salary for each completed year of service, and the number 26 represents the number of working days in a month.
It is important to note that the gratuity amount cannot exceed 20 lakhs INR, as per the Payment of Gratuity (Amendment) Act, 2018. This means that even if an employee's gratuity amount is calculated to be more than 20 lakhs INR, they will only receive a maximum of 20 lakhs INR.
Employers are required to provide gratuity to their employees within 30 days of the employee's resignation or retirement. Failure to do so can result in penalties for the employer.
It is also important to note that gratuity is a mandatory benefit that employers must provide to their employees. It is not something that employees can negotiate or opt-out of. Employers who fail to provide gratuity to their employees can face legal action.
In conclusion, gratuity is an important financial benefit that employees are entitled to receive when they retire or resign from their positions. It is calculated based on the employee's last drawn salary and the number of years they have worked for the company. Employers are required to provide gratuity within 30 days of the employee's resignation or retirement, and failure to do so can result in penalties. It is important for both employers and employees to understand their rights and obligations when it comes to gratuity.
