BANKING AFFAIRS

Detailed explanation-1: -Gratuity is a benefit given by the employer to employees. A recently approved amendment by the Centre has increased the maximum limit of gratuity. Now it is tax exempt up to Rs 20 lakh from the previous ceiling of Rs 10 lakh, which comes Section 10(10) of the Income Tax Act.

Detailed explanation-2: -The maximum amount of retirement gratuity or death gratuity admissible under Rule 45 is twenty lakh rupees. year 4. In calculating the length of qualifying service under Rule 45, fraction of a equal to three months and above is treated as a completed six monthly period and reckoned as qualifying service.

Detailed explanation-3: -The ceiling of the gratuity was raised to Rs. 10 lakh w.e.f., 01-01-2007 in terms of office memorandum of Government of India dated 26-11-2008.

Detailed explanation-4: -The Act provides for payment of gratuity at the rate of 15 days wage s for each completed year of service subject to a maximum of Rs. ten lakh. In the case of seasonal establishment, gratuity is payable at the rate of seven days wages for each season.

Detailed explanation-5: -Upon retirement, 1/4th of the last drawn basic salary of a month including Dearness Allowance is taken into account to calculate the gratuity of an employee.