Dear Sir/Madam,
I am confused regarding this issue: if an employee has served in an organization for 5 years and 8 months, is their period of service considered to be 6 years?
So, when calculating the gratuity, in the formula (number of years served), do we need to consider 6 years or just one year (as after completing 5 years, one additional year has been completed)?
Kindly help me clarify this matter.
Thank you.
From India, Mumbai
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1I am confused regarding this issue: if an employee has served in an organization for 5 years and 8 months, is their period of service considered to be 6 years?
So, when calculating the gratuity, in the formula (number of years served), do we need to consider 6 years or just one year (as after completing 5 years, one additional year has been completed)?
Kindly help me clarify this matter.
Thank you.
From India, Mumbai
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i am worked one concern in tirupur for 9 years and 4 months at the salary for Rs. 16000.00 consolidated. now i resigned from the company what is the amount get from the company
From India, Bangalore
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From India, Bangalore
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Gratuity calculation
= (Salary / 26) x 15 x Number of years in service
Where;
Salary is โLast drawn basic pay + DAโ
26 is the average working days in a month (As per Gratuity rules โ 26 days not 30 days calculated)
15 is the actual days considered for gratuity in a year
Source: http://onerupee.net/calculate-your-gratuity-in-india/
From India, Bangalore
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= (Salary / 26) x 15 x Number of years in service
Where;
Salary is โLast drawn basic pay + DAโ
26 is the average working days in a month (As per Gratuity rules โ 26 days not 30 days calculated)
15 is the actual days considered for gratuity in a year
Source: http://onerupee.net/calculate-your-gratuity-in-india/
From India, Bangalore
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Query: If an employee has completed 5 years with the same organization but has received thrice increment in that duration, and his basic was revised each time, can we calculate his gratuity based on the number of years * basic or should we directly calculate it for the 5 years with the current basic as he is currently drawing? Please guide.
From India, Khambhat
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From India, Khambhat
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Formula for gratuity is==salary/26*15*number of years of service. Salary is current basic pay. Hope it is clear.
From India, Pune
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From India, Pune
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Hi team,
Thanks for the lovely info. I am in my current organization, where fortunately or unfortunately, I am leaving my current position exactly after 4.7 years (including my last working day). Could anyone please tell me if I would be able to apply for my gratuity?
Thank you.
From India, Hyderabad
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Thanks for the lovely info. I am in my current organization, where fortunately or unfortunately, I am leaving my current position exactly after 4.7 years (including my last working day). Could anyone please tell me if I would be able to apply for my gratuity?
Thank you.
From India, Hyderabad
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Hello,
I joined GTL Limited in India on 1st June 2008. On 16th June 2008, GTL sent me to Tanzania. My salary was paid from there, and they stopped my Indian salary even though they sent me on deputation. In July '10, I returned to India. In July '10 and August '10, they paid me 70% as a salary advance. The salary paid was decided at the time of joining. Later, they sent me to Nepal in September '10. I was paid by GTL Nepal during my time there. I worked in Nepal until 15th July '12. On 16th July '12, I was sent to Myanmar and continued working until June '15. The HR department requested me to resign from GTL India, and I submitted my resignation letter on 23rd June 2015.
My questions are:
1. Am I eligible for Gratuity?
2. Which salary will be considered as the last drawn salary?
Please reply to me. Thank you.
Soumen Das
From Myanmar [Burma], undefined
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I joined GTL Limited in India on 1st June 2008. On 16th June 2008, GTL sent me to Tanzania. My salary was paid from there, and they stopped my Indian salary even though they sent me on deputation. In July '10, I returned to India. In July '10 and August '10, they paid me 70% as a salary advance. The salary paid was decided at the time of joining. Later, they sent me to Nepal in September '10. I was paid by GTL Nepal during my time there. I worked in Nepal until 15th July '12. On 16th July '12, I was sent to Myanmar and continued working until June '15. The HR department requested me to resign from GTL India, and I submitted my resignation letter on 23rd June 2015.
My questions are:
1. Am I eligible for Gratuity?
2. Which salary will be considered as the last drawn salary?
Please reply to me. Thank you.
Soumen Das
From Myanmar [Burma], undefined
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The moment you complete your 5 yrs from the DOJ, you are eligible for gratuity. Hence you joined in 2008 and left n 2015, yes you are eligible for your gratuity.
From India, Gurgaon
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From India, Gurgaon
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Hi,
You can use the link below for the calculation of gratuity:
[Gratuity Calculator: Online Gratuity Calculator to find the Gratuity](http://www.moneycontrol.com/personal-finance/tools/gratuity-calculator.html)
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You can use the link below for the calculation of gratuity:
[Gratuity Calculator: Online Gratuity Calculator to find the Gratuity](http://www.moneycontrol.com/personal-finance/tools/gratuity-calculator.html)
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Gratuity is a benefit received by an employee for services rendered to an organization. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee gets gratuity when he/she resigns, retires or is laid off. In case of death or disablement there is no minimum eligibility period.
How Gratuity is Calculated
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
According to this formula, the time period of over six months or more is considered as one year.
This means if you have completed five years and seven months of service, the number of years would be considered as six years for calculation of gratuity benefit.
On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years.
An employer can however give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, entire amount of gratuity received on retirement or death is currently exempted from income tax.
In case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.
For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is least of the following:
Maximum amount specified by the government which is currently Rs. 10 lakh
Last drawn salary X 15/26 X years of service
Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr Ashish, for example, is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh but suppose he has actually received gratuity of Rs. 12 lakh.
So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. So Mr Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).
For non-government employees not covered under the Payment of Gratuity Act, the income tax exemption on any gratuity received is least of the following:
Half month's average salary for each completed year of service
Maximum amount specified by the government which is currently Rs. 10 lakh
Actual gratuity received
(Average monthly salary is to be computed on the basis of average of salary for 10 months immediately preceding the month (not the day) of retirement)
For example, the last drawn salary (basic plus DA) of Mr Bhupesh, for example, is Rs. 70,000 and he has worked for 35 years. The gratuity according to the formula is Rs. 12.25 lakh and he has received this amount as gratuity. For tax purposes, Rs. 10 lakh would be considered as exemption limit as it is the lowest of the three factors. So Mr Bhupesh will have to pay tax on Rs. 2.25 lakh (Rs. 12.25 lakh - Rs. 10 lakh).
From India
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How Gratuity is Calculated
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
According to this formula, the time period of over six months or more is considered as one year.
This means if you have completed five years and seven months of service, the number of years would be considered as six years for calculation of gratuity benefit.
On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years.
An employer can however give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, entire amount of gratuity received on retirement or death is currently exempted from income tax.
In case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.
For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is least of the following:
Maximum amount specified by the government which is currently Rs. 10 lakh
Last drawn salary X 15/26 X years of service
Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr Ashish, for example, is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh but suppose he has actually received gratuity of Rs. 12 lakh.
So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. So Mr Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).
For non-government employees not covered under the Payment of Gratuity Act, the income tax exemption on any gratuity received is least of the following:
Half month's average salary for each completed year of service
Maximum amount specified by the government which is currently Rs. 10 lakh
Actual gratuity received
(Average monthly salary is to be computed on the basis of average of salary for 10 months immediately preceding the month (not the day) of retirement)
For example, the last drawn salary (basic plus DA) of Mr Bhupesh, for example, is Rs. 70,000 and he has worked for 35 years. The gratuity according to the formula is Rs. 12.25 lakh and he has received this amount as gratuity. For tax purposes, Rs. 10 lakh would be considered as exemption limit as it is the lowest of the three factors. So Mr Bhupesh will have to pay tax on Rs. 2.25 lakh (Rs. 12.25 lakh - Rs. 10 lakh).
From India
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