Gratuity Calculation: If you have worked in the same company for 10 years, then you can create a fund of lakhs of rupees for yourself through gratuity. This is a retirement benefit which is given on the basis of the last salary and service period, it can be easily calculated with a simple formula.
How much do you know about gratuity?
If you are a salaried person and work in a private company, then gratuity is a big security for your future. Employees working under EPF get its benefit after completing five years of service. This amount is given to the employee by the company, which is a tribute to his long and honest service. By the way, gratuity not only provides financial support after retirement, but it also acts as a financial safety shield for you in case of changing jobs.
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Who gets the benefit of this
If you are in service and are entitled to get gratuity, then it is important for you to know that according to the ‘Payment of Gratuity Act, 1972’, the maximum limit of gratuity is currently fixed at ₹ 20 lakh. That is, even if your gratuity is more than this as per the calculation, under the law you will get a maximum of ₹ 20 lakh only. So now let us understand that if someone’s salary is 50,000, then what will be his gratuity after 10 years of service.
what does the calculation say
Gratuity is calculated using a fixed formula: (Last salary × 15/26 × total working years). For example, if an employee works in the same company for 10 years and his last salary (basic + DA combined) is ₹50,000, then his gratuity will be ₹50,000 × (15/26) × 10 = ₹2,88,462. In this, a month is considered to have 26 days because on an average there are 4 holidays, while gratuity is calculated on the basis of 15 days’ salary instead of working days every year.
Understand the calculation in simple words
Now let us calculate the gratuity. Suppose the employee’s last basic salary and dearness allowance is ₹50,000 and he has worked for 10 years in the company. Now the calculation of gratuity will be as follows: ₹50,000 × (15/26) × 10 = ₹50,000 × 0.576923 (approx.) × 10 = ₹28,846.15 × 10 = ₹2,88,461.50. That is, an employee who worked for 10 years on a basic salary of ₹50,000 will get a gratuity of approximately ₹2,88,461.50.
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How much will be the gratuity on 55,000
If you are employed, gratuity is a big financial security benefit for you. It is a reward for your long service and hard work, which the company gives on retirement, leaving the job or in special circumstances. The formula for calculating gratuity is – G = n × b × 15 / 26, where n is the years worked in the company, b is your last basic salary + DA. Let us assume that if an employee worked for 10 years and his last salary is ₹ 55,000, then he can get gratuity of up to ₹ 3.17 lakh.
How to do calculation at home
With the help of gratuity calculator, you can easily know from the comfort of your home how much gratuity you should get on leaving the job, retirement or in any other situation. This not only saves your time and resources, but also helps in making long term financial planning.
what does the rule say
In simple words, gratuity is a gift to the employee for his work. It is given in case of retirement, leaving the job, death or disability. The employee is entitled to 15 days’ salary every year and 26 working days are considered in it. (Note: The news is based on general information, calculation may be more or less)
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