As per Lawkidunya, in Pakistan, companies can establish approved gratuity funds to offer financial security to their employees upon retirement, disability, or death. These funds offer tax advantages for both employers and employees, making them a valuable tool for employee benefits planning.
Is Gratuity Taxable in Pakistan
Therefore, gratuity is considered part of your overall taxable salary income in Pakistan. Tax Exemptions for Gratuity: While gratuity is generally included in your salary for tax purposes, the Income Tax Ordinance provides specific exemptions under certain conditions.
What is the Gratuity Law in Punjab
Condition eligibility & rate of gratuity:- (1) A Corporation employee, who resigns, retires or is discharged for reasons other than those of misconduct by the Corporation before 09-9-1990 shall be entitled to Gratuity @ one month’s pay on the basis of last pay drawn for each completed year of service in the Corporation.
How Gratuity is Calculated in Pakistan
In numerical terms, gratuity can be calculated by the following formula: Gross salary in last year of employment/26) x 30 x number of years of employment in the company. Of the three existing retirement benefit schemes, gratuity is the only benefit that is a statutory obligation on some employers.