The document discusses gratuity benefits provided by employers in India. Gratuity is calculated based on an employee's last drawn salary and years of continuous service of 5 years or more. It must be paid to employees at factories, mines, ports and other establishments with 10 or more employees. The maximum gratuity amount was increased in 2018 to Rs. 20 lakh and must be paid within 30 days of application. Gratuity is exempt from tax up to 15 days' salary for each year of service.

2. GRATUITY
• BENEFIT GIVEN BY THE EMPLOYER TO THE EMPLOYEE FOR RENDERING SERVICES CONTINUOUSLY FOR FIVE
YEARS OR MORE

3. APPLICABILITY
• EVERY FACTORY (AS DEFINED IN FACTORIES ACT), MINE, OILFIELD, PLANTATION, PORT AND RAILWAY.
• EVERY SHOP OR ESTABLISHMENT TO WHICH SHOPS & ESTABLISHMENT ACT OF A STATE APPLIES IN
WHICH 10 OR MORE PERSONS ARE EMPLOYED AT ANY TIME DURING THE YEAR END.
• ANY ESTABLISHMENT EMPLOYING 10 OR MORE PERSONS AS MAY BE NOTIFIED BY THE CENTRAL
GOVERNMENT.
• ONCE ACT APPLIES, IT CONTINUES TO APPLY EVEN IF EMPLOYMENT STRENGTH FALLS BELOW 10

4. CALCULATION OF GRATUITY
GRATUITY = MONTHLY SALARY X 15 X NUMBER OF YEARS OF SERVICE
26
MONTHLY SALARY= LAST MONTH DRAWN SALARY BY THE EMPLOYEE.
2 6 = TOTAL NUMBER OF WORKING DAYS IN A MONTH.
15 = NUMBER OF DAYS IN HALF OF THE MONTH.

5. PAYMENT AMOUNT
• THE MAXIMUM AMOUNT OF GRATUITY PAYABLE TO AN EMPLOYEE SHALL NOT EXCEED 3, 50,000/- RUPEES (ACCORDING
TO THE LATEST 2010 AMENDMENT THE MAXIMUM GRATUITY PAYABLE AMOUNT WAS INCREASED TO RUPEES
10,00,000/-)
• ACCORDING TO THE (THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2018) THE MAXIMUM AMOUNT OF GRATUITY
PAYABLE TO AN EMPLOYEE SHALL NOT EXCEED 20,00,000/- RUPEES
• THE PAYMENT OF GRATUITY CAN BE MADE IN CASH, DEMAND DRAFT, OR BY CHEQUE.
• GRATUITY RECEIVED UNDER THE GRATUITY ACT IS EXEMPT FROM TAXATION TO THE EXTENT THAT IT DOES NOT EXCEED
15 DAYS’ SALARY FOR EVERY COMPLETED YEAR OF SERVICE CALCULATED ON THE LAST DRAWN SALARY

6. DEDUCTION OF GRATUITY
• PAYMENT OF GRATUITY IS NOT APPLICABLE TO EMPLOYEE WHO HAS BEEN DISMISSED FROM THE SERVICE
FOR THE REASON OF INDISCIPLINE OR MISCONDUCT.

7. • THE RULES SUGGESTS THAT ONCE AN EMPLOYEE BECOMES ELIGIBLE TO RECEIVE GRATUITY, HE CAN APPLY WITHIN 30
DAYS FROM THE DATE IT BECOMES PAYABLE. FURTHER, IF THE DATE OF RETIREMENT OR SUPERANNUATION IS KNOWN,
THEN TOO, THE APPLICATION CAN BE BEFORE 30 DAYS.
• HOWEVER, AN EMPLOYER CANNOT REJECT AN APPLICATION BY THE EMPLOYEE AFTER THE EXPIRY OF 30 DAYS, IF THE
DELAY HAPPENED DUE TO A VALID REASON. THE RULES FURTHER CLARIFY THAT NO CLAIM FOR GRATUITY SHALL BE
INVALID MERELY BECAUSE THE CLAIMANT HAS NOT FILED HIS APPLICATION WITHIN THE SPECIFIED PERIOD.
• AN EMPLOYER IS REQUIRED TO SPECIFY THE AMOUNT PAYABLE AND MENTION THE DATE OF PAYMENT WITHIN 15 DAYS
OF RECEIPT OF APPLICATION. THE PAYMENT MUST BE MADE WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF
APPLICATION.
• IN CASE EMPLOYER REJECTS THE APPLICATION OF AN EMPLOYEE FOR THE PAYMENT OF GRATUITY, HE WILL BE REQUIRED
TO SPECIFY THE REASON FOR REJECTION.

8. DIFFERENT TYPES OF FORMS OF GRATUITY