Is gratuity deducted from salary?

No. Gratuity is entirely funded by the employer. It's a statutory benefit, not a salary deduction. Your CTC may include gratuity as a component.

What if I leave before 5 years?

No gratuity if service is less than 5 years. EPF can be withdrawn after 2 months of unemployment, regardless of service period.

Can I get both at retirement?

Yes! At retirement you receive: EPF corpus (accumulated over career) + gratuity from last employer + any pension from EPS.

Gratuity vs EPF: Understanding Your Retirement Benefits

Compare gratuity and EPF — calculation method, eligibility, tax treatment, and withdrawal rules.

Criteria	Gratuity	EPF
Calculation	15/26 × last salary × years	12% of basic monthly (employee + employer)
Eligibility	5 years continuous service	From joining (organizations with 20+ employees)
Tax Exemption	Up to ₹20 lakh	Tax-free if 5+ years service
Returns	Not an investment (lump sum at exit)	8.15% guaranteed annual returns
Employer Contribution	Fully employer-funded	12% from employer + 12% from employee
Portability	Paid at exit from each employer	Portable via UAN across employers

Our Verdict

EPF and gratuity are complementary, not competing. EPF builds throughout your career with compound interest. Gratuity is a loyalty bonus paid at exit. Together they form the foundation of retirement security for salaried Indians.

Detailed Analysis

EPF and gratuity are both mandatory retirement benefits for eligible employees, but they work very differently.

Gratuity is a lump sum paid by the employer when you leave after 5+ years. Formula: 15/26 × last drawn salary × years of service. It's entirely employer-funded and acts as a reward for loyalty.

EPF is a monthly contribution scheme where both employee and employer contribute 12% of basic salary. The accumulated corpus earns 8.15% interest, compounding annually. It's portable and can be carried across employers via UAN.

Gratuity vs EPF: Understanding Your Retirement Benefits

Our Verdict

Detailed Analysis

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