You get the amount of gratuity in the event of leaving the job or retirement. The amount received as gratuity is tax free and proves to be financially helpful to the employee.
After working continuously for 5 years in any company, you become entitled to get gratuity from that company. You get the amount of gratuity in the event of leaving the job or retirement. The amount received as gratuity is tax free and proves to be financially helpful to the employee. The amount you will get as gratuity is decided under a formula. The amount of gratuity is fixed on the basis of the salary of each person, the years of his service etc. If you too have been working in a company for 5 years or more, then here’s how you can calculate your gratuity amount.
Gratuity is decided by this formula
There is a fixed formula to decide the amount of gratuity. With this formula, you can also know how much gratuity you will get. The formula is – (last salary) x (number of years worked in the company) x (15/26). Last salary means the average of your last 10 months salary. Basic salary, dearness allowance and commission are included in this salary. Due to 4 days of Sunday in a month, 26 days are counted and gratuity is calculated on the basis of 15 days.
Suppose you earn 50 thousand
Suppose your last salary is 50 thousand rupees. In this case, the calculation will be based on this formula 50000x10x15/26. Based on this formula, you will get Rs 288461.54 as gratuity. On the other hand, if the average of your last salary is 50 thousand rupees and the duration of the job is 15 years, then according to the 50000x15x15/26 formula, you will get 432692.30 rupees. Although, if the company wishes, it can give more amount than the fixed amount as per its wish, but according to the rules, it should not exceed 20 lakhs.
In this case the calculation is done differently.
When the company or organization is not registered under the Gratuity Act, the employees are not covered under the Gratuity Act. In this case, it is the discretion of the company whether to give gratuity or not. But if the company still wants to give gratuity to an employee, then its formula is different. In this case, the amount of Gratuity will be equal to half a month’s salary for every year. But the number of working days in a month will be considered as 30 days, not 26.