Gratuity is a monetary benefit employers pay certain employees when their service tenure is over, under specific circumstances.
At least 5 years of service are required to qualify for gratuity, and the maximum amount an employee receives is Rs.20 lakh.
For the final amount to be received, use the gratuity formula:
Gratuity = (15 x last drawn salary x tenure of working) /26
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Hey friend,
The first time I came across the word ‘gratuity’ was when I was looking for employment and filling out multiple job applications every day. A friend of mine then explained to me in detail gratuity meaning. Keep reading to know what I learned.
What is gratuity?To put it in simple words, Gratuity can be deemed as a part of the salary received by an employee. It is given by the employers for the work done and services provided by the employee in the company.
Gratuity is a benefit that is given upon leaving the job as part of the final settlement. Details of the same have been mentioned in The Payment of Gratuity Act, 1972. It is not a part of your CTC or salary that is received each month
Usually, it is paid to an employee after they have rendered 5 years of continuous service in a company. The maximum amount of gratuity that can be paid to an employee has been set at Rs 20 lakh.
Now that I have told you, gratuity meaning in salary. You should know how it's calculated. There is a simple formula that is followed, it is Gratuity = Average salary (basic + DA) * ½ * Number of service years.
This is all from my end. I hope gratuity meaning is now clear. If you have questions about your company's policy, speak to a senior about it.
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Read more :
Is Gratuity Taxable In India?
How To Check Gratuity Amount?
How to withdraw gratuity online?
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Authors Of The Question
What is gratuity ?
Jayesh
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2 Year
2022-04-05T17:53:09+00:00 2022-04-05T17:53:11+00:00Comment
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