Modi government is planning to reduce gratuity eligibility limit to 3 years, till now employees need to work for a minimum 5 years in order to become eligible for gratuity scheme. Keeping in a view of coming Lok Sabha elections the central government is planning to give a gift to the private sector employees. Once this decision gets approval then the gratuity eligibility tenure will become 3 years.
Recently the tax free gratuity limit was increased to 20 lakhs, it will help private employees after their retirement, in the same manner, if the gratuity eligibility period is reduced to 3 years then it is really a great news for private sector employees, because at present when an employee works for 3 or 4 years and leaves the company then they don’t get any gratuity amount. To get gratuity employees need to work continuously for 5 years, nowadays it is not possible, because employees are switching their job due to several reasons. So once the gratuity eligibility period is reduced to 3 years then all of these private sector employees will be benefited.
How to Calculate Gratuity
There are several online sites where you can calculate your gratuity amount online, if you want to calculate gratuity amount offline then here is the formula = (basic salary/26) X 15 X number of years of service.
Gratuity Scheme is Applicable to:
The payment of gratuity act 1972 is applicable to the employers who are employing 10 or more than 10 employees. Employees need to have 5 years of continuous service to become eligible for gratuity and in some cases like deaths and accidents private sector employees will get gratuity amount even before 5 years also.