Gratuity is payable after five years of continuous service on resignation, retirement, death or disablement, where the five-year rule is waived for death or disablement. You claim it by applying to the employer, who must pay within 30 days.
You qualify after five continuous years with an establishment covered by the Payment of Gratuity Act (10 or more employees). Service over six months in the final year rounds up to a full year.
Apply in writing using Form I within 30 days of gratuity becoming payable. A nominee uses Form J and a legal heir uses Form K in the case of death.
The employer must acknowledge the application, calculate the amount as last basic plus DA multiplied by 15/26 for each completed year, and pay within 30 days of it becoming payable.
Gratuity is tax-free up to a lifetime limit of Rs 20,00,000. Any amount above the limit is added to taxable income.
Interest is payable on delayed gratuity. If it is still not paid, you can apply to the Controlling Authority under the Act (the labour office) for recovery.
Only if service ends due to death or disablement, in which case the five-year condition is waived. Otherwise five continuous years are required.
The employer must pay within 30 days of gratuity becoming payable, with interest for any delay.
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