Gratuity is the amount that an employee receives either after the retirement or after completing at least five years of service in the same organization. According to the Payment of Gratuity Act 1972, for the non-government employee, the tax-exemption limit was up to Rs.10lac (collected in employee’s entire life) which has been changed and increased to Rs. 20lac, effective from 20th March 2018. For any government employee, gratuity amount received in their entire life is tax-free.
Gratuity form F
Gratuity is applicable only to those business/organization having more than ten employees. Gratuity from F is required during the joining date of the employee. It is one of the important document required to be filled for every organization. It is the retirement benefit given to an employee who has to complete 5 years of service in an organization under the Gratuity Act 1972.
Gratuity is calculated as below: Number of years served in the company * (Last basic salary + DA) * 15 / 26. If an employee leaves the job after completing 5.8 years of service, the gratuity is calculated on the basis of 6 years. On the other side, if an employee leaves the job after completing 5.3 years of service, the gratuity is calculated on the basis of 5 years.
While filling gratuity form F, you need to consider details such as organization/business name with full address, the name of the employee, name of the nominee with address, relationship with an employee, the age of nominee and the proportion by which the gratuity will be shared.
Gratuity from I
Gratuity form I is used to claim gratuity amount. Gratuity is the amount received by the employee in the gratitude of the service given to the company. It is one of the retirement benefit provided to an employee offered by an employer after leaving the company. This form is submitted under subsection (1) of section 4 under the Payment of Gratuity Act, 1972.
Every employee must complete five years of service to receive the gratuity amount. The reason for leaving the job may be due to retirement, change in the job after completing five years of service, disablement due to the accident, or voluntary retirement. If you are suffering from disablement, gratuity will be paid even if you have not completed five years of service.
While filling gratuity form I, you need to write the full name with complete address, date, and the reason for termination of service, employee number, the department in which you have worked, date of appointment, the total period of service and last drawn salary. After filling all the details required in Gratuity form I, you need to submit your signed form to your employer. You also need to provide your bank account details like bank name, account number, and IFSC code.
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