Central government employee? Here are gratuity rules you must know

Employees are eligible to receive gratuity, among other allowances, after a few years of service. Both Central and state government employees become eligible for gratuity. The maximum limit for types of gratuity remain to be Rs 20 lakh, since 2016. The official website mentions several other rules related to gratuity that you must be aware of. 

What is Gratuity?

It is a sum that you receive when the employment term ends. It is a form of acknowledgement given to an employee for the services that he has rendered. This benefit is payable under the Payment of Gratuity Act, 1972. Even though the amount has to be paid at the end of employment, some companies have different rules that allow you to claim this money beforehand. However, the person should have completed at least five years of service in an organisation.

What are the rules for Gratuity?

- The maximum limit of all types of gratuity has been raised to Rs 20 lakhs w.e.f. 1.1.2016

- Dearness Allowance admissible on the date of retirement/death is included in the emoluments for the purpose of computing all types of gratuity.

- Interest (at the rate applicable to GPF deposits determined from time to time by the Government of India) is payable on delayed payment of DCRG, if it is delayed beyond three months from the date of retirement.

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When to apply for Gratuity?

The Payment of Gratuity Act, 1972 states that you can apply within a matter of 30 days from the date it becomes payable. If the date of superannuation or retirement is known, the application can be made before 30 days. However, the rules specify that your claims cannot be regarded invalid, simply because the application was not filed in the specific period.