Gratuity

GRATUITY

1) Payable on superannuation retirement, voluntary retirement, resignation after 10 years of service, death of the employee, incapacitation, termination of service.

2) Service of 6 months and above will be reckoned as one year.

3) 26 days is construed as a month.

4) BP & all other allowances qualifying for PF & incremental portion of FPP are eligible for gratuity.

5) Gratuity cannot be forfeited under any circumstances except in case of dismissal where bank has incurred loss due to misconduct of the employee.

A-as per gratuity act:

Half a month of last wages drawn for each completed year of service. Wages includes BP + special allowances ranking for PF + FPP (DA & incremental component) + DA

Gratuity amount = wages × no. of yrs of service × 15/26

WITH A MAXIMUM OF RS.10,00,000/-

B- as per BPS:

One month pay for each completed year of service with a maximum of 15 years + ½ month pay for every year of service beyond 30 years (maximum 33 years of service.)

Pay means average of last 12 months of BP + all allowances ranking for PF +

Incremental component of FPP

Higher of A & B above

Gratuity amount is exempt from income tax up to the limit of Rs.10,00,000/-