- 1. For calculation of gratuity, salary or wage means and includes all basic wage earned by an employee and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
- 2.Normally, the eligibility criteria for gratuity is minimum 4 years 180 days of service. But in the event of death or disability of an employee due to accident or disease; gratuity is paid before completion of 4 years 180 days. In case of death, gratuity is paid to the nominee or legal heir of the deceased employee.
- 3.The maximum tax-free gratuity limit for employees to Rs 20 lakh. If an employee receives gratuity more than 20 Lakh, the exceeding amount would liable to be taxed as per Government prescribed rate.