Gratuity is an amount given to employees upon leaving a job after 5+ years or retirement. It is calculated as basic pay + dearness allowance divided by 26 times number of years of service times 15. Gratuity received by employees is taxable as salaries, with an exemption for those covered by the Gratuity Act of the minimum of gratuity received, 15 days salary per year of service (partial years count as full), or Rs. 350,000. The Employees' State Insurance Act provides medical, sickness, maternity, disability and funeral benefits to covered employees, funded by contributions from employers at 4.75% and employees at 1.75% of gross salary up to Rs. 15,000.

1. INTRODUCTION
 Gratuity-- Gratuity refers to the emoluments received by an employee
from his employer in gratitude for the services rendered.
 ESIC -- An Act to provide for certain benefits to employees in case of
sickness, maternity and employment injury

2. GRATUITY
 Gratuity is an amount given to employees by employer when they
leave the job after completing five years or minimum 240 days per
year or after retirement. The number of year may differ from
company to company
 Gratuity is payable under the payment of wages act.
 Gratuity shall be payable to an employee on the termination of his
employment after he has rendered continuous service for not less than
five years.
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease
 Gratuity is calculated as Basic + DA divided by 26 * No of years of
service *15.
Note: Last basic drawn will be considered

3. TAXABILITY OF GRATUITY
Gratuity received by an employee is taxable as salaries. The Income
tax Act segregates the employees receiving gratuity on the following
basis:
 Government employees
 Non – Government employee covered under the Gratuity Act.
 Non – Government employee and not covered under the Gratuity
Act.
Exemption available for employees covered under the Gratuity Act:
In case of employees covered under the Gratuity Act, exemption
is limited to the extent of minimum of the following:
 Gratuity actually received

4. TAXABILITY OF GRATUITY(CONTD.)
 15 days salary for every completed year of service or part thereof
(i.e. services in excess of 6 months will be treated as full year
service)
 Rs 3,50,000 (the maximum limit as provided in the Gratuity Act)

5. Employees State Insurance Act
 All the employees in the factories or establishments to which the Act
applies shall be insured under this Act
 The contribution comprise of employer’s contribution and employee’s
contribution at a specified rate
 Contribution rate : 1.75% - employees
4.75% -employers
 The ceiling 15,000/- gross salary. After reaching the ceiling one will be
exempted. (with effect from 1.05.2010)
 Two contribution periods each of six months:
1st April to 30th Sept
1st Oct. to 31st March

6. Employees State Insurance Act(Contd)
 Two corresponding benefit periods of six month
1st January to 30th June
1st July to 31st December
Benefits:
 Medical Benefit
 Sickness Benefit
 Maternity Benefit
 Disablement Benefit
 Funeral Expenses
For more information, please visit :
http://esic.nic.in/benefits.htm

7. Thank You