- Advertisement -
HomePersonal FinanceGratuity Calculation: If salary is Rs 35000 then after 7 years you...

Gratuity Calculation: If salary is Rs 35000 then after 7 years you will get full Rs 1,41,346 in gratuity, check calculation

- Advertisement -
- Advertisement -

Gratuity Calculation: For gratuity, it is mandatory for the employee to work in the same company for at least 5 years. In case of employment for less time than this, the employee is not eligible for gratuity.

Gratuity Calculation: The government has recently changed the rules regarding gratuity. However, this rule is regarding tax on gratuity. The limit of tax free gratuity up to Rs 20 lakh has now been increased to Rs 25 lakh. This is the amount which the employee receives from the organization or employer. It is mandatory for the employee to work with the employer for at least 5 years. Usually this amount is given when an employee leaves the job or he retires. Even in the event of death of an employee due to any reason or his leaving the job due to an accident, he or his nominee (Gratuity nominee) gets the amount of gratuity.

What is the eligibility of gratuity?

According to the rules of Gratuity Payment Act 1972, the maximum amount of gratuity paid can be up to Rs 25 lakh. For gratuity, it is mandatory for the employee to work in the same company for at least 5 years. In case of employment for less time than this, the employee is not eligible for gratuity. Gratuity is not paid even if you leave the job within 4 years and 11 months. However, this rule does not apply in case the employee leaves the job due to sudden death or accident.

Let us tell you that gratuity is given by the company to its employees. For this, it is necessary to work in the same company for 5 consecutive years. However, it is not necessary for completion of 5 years of service to be given gratuity amount in case of death or disability. The maximum limit of gratuity is Rs 20 lakh.

How is gratuity calculated?

Total gratuity amount = (final salary) x (15/26) x (number of years worked in the company). understand with example

Suppose you worked in the same company for 7 years. If your final salary is Rs 35000 (including basic salary and dearness allowance), then the calculation will be like this-

(35000) x (15/26) x (7) = Rs 1,41,346. This means that you will be paid Rs 1,41,346.

What is the meaning of 15/26 in calculations?

Gratuity is calculated on the basis of 15 days in a year. At the same time, only 26 days are counted in the month, because it is believed that 4 days are holidays. An important thing about gratuity calculation is that if an employee works for more than 6 months, then it will be calculated as one year. If an employee works for 7 years and 7 months, then it will be considered as 8 years and the amount of gratuity will be calculated on this basis. At the same time, if one works for 7 years and 3 months then it will be considered only for 7 years.

Gratuity is decided in two categories

In the Gratuity Payment Act 1972, to decide the formula for the amount of gratuity to be received by the employees, employees have been divided into two categories. The first category includes those employees who come under the purview of this Act, while the second category includes those employees who are outside the Act. Both types of employees working in private and government sectors are covered in these two categories.

Category 1-

Those employees who come under the purview of Gratuity Payment Act 1972.

Category 2-

Those employees who do not come under the purview of Gratuity Payment Act 1972.

Formula to determine the amount of gratuity (for employees covered under the Act)

Last salary x length of service x 15/26

Also Read- 👇👇👇

Pravesh Maurya
Pravesh Maurya
Pravesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ businessleaguein@gmail.com
RELATED ARTICLES

Most Popular

Recent Comments