Deduction in the form of gratuity from an employee’s salary depends on their basic salary. Gratuity is also paid on the same basis as the deduction is made. Some companies deduct the amount of gratuity on a half-yearly basis, while some on an annual basis. However, it is paid on an annual basis only.
new Delhi. Every employed person in the government or private sector is entitled to various types of funds after retirement. In this, there is a fund of gratuity, which is received in lieu of working continuously for a certain time with a company or employer. The amount of gratuity is given to the employee after calculating it on the basis of his basic pay and years spent in the company. But, do you know that this amount is deducted from your salary only.
Investment advisor Manoj Jain says that gratuity is also a part of the employee’s salary and most employers include it in the employee’s CTC. It is obvious that the amount of gratuity received at the time of retirement or resignation is the money previously deducted from your own account. In such a situation, the question arises as to how much gratuity can be deducted from the salary of an employee and on what does this deduction depend.
What is the deduction formula
According to the website of Bankbazaar.com, the deduction of gratuity from an employee’s salary depends on their basic salary. Since gratuity is also a part of the CTC of the employee, its amount is deducted from the salary itself. The formula for deduction is that an amount equal to 15 days of basic salary received at the end of every year is deducted and put in gratuity. This money is collected year after year and given to you as gratuity.
How much money will be deducted
Suppose the basic salary of an employee is 30 thousand rupees and his average remains the same till the end of the year, then an amount equal to 15 days of his basic salary is deducted. In this way, out of the total salary of the employee, about 15 thousand rupees are deposited as gratuity every year. Some employers deduct the amount of gratuity every half year and the money will be deducted from the employees of such companies every half year. However, the formula for deducting half the money will be money equal to 7 days of their basic pay. That is, every half-yearly 7.5 thousand rupees will be deducted from the account of an employee with a basic salary of 30 thousand.
How to become a fat fund
If an employee works with the same employer for about 30 years, then it is obvious that his basic will increase year by year. On this basis, his gratuity deduction will also increase and during the entire tenure he gets a huge fund. The same formula is also applied at the time of payment of gratuity to the employee. That is, the way in which deduction is made, gratuity is also paid on the same basis.
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