Gratuity Calculation: Have you been working in the same place for more than four years? If yes then this news is for you only. When a man starts doing a job, he does not know much about gratuity. But as the time increases in the job, the man is curious to know about it. Anyway, there is a lot of discussion about these gratuities, in fact there were reports about changes in its rules.
what is gratuity
Apart from salary, pension and provident fund, gratuity is also given to the employees working for a long time in the same company. Gratuity is a reward given to an employee by the company. If the employee fulfills certain conditions of the job, then the gratuity payment will be guaranteed to him according to a prescribed formula. A small part of the gratuity is deducted from the salary of the employee, but a large part is given by the company. According to the existing rules, if a person has worked in a company for at least 5 years, then he is entitled to gratuity.
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tax free gratuity
Under the Payment of Gratuity Act, 1972, this benefit is available to every employee of a company where more than 10 people work. If the employee changes job, retires or leaves the job due to any reason but he fulfills the rules of gratuity then he gets the benefit of gratuity. The government has also increased the amount of tax free gratuity from Rs 10 lakh to Rs 20 lakh.
How many years, how much gratuity is available on the job
It has a fixed formula.
Total Gratuity Amount = (Last Salary) x (15/26) x (How many years worked in the company)
Suppose an employee worked in the same company for 20 years. The final salary of that employee is Rs 75000. Here only 26 days are counted in a month, because it is believed that 4 days are holidays. At the same time, gratuity is calculated on the basis of 15 days in a year.
Total amount of gratuity = (75000) x (15/26) x (20) = Rs 865385.
In this way, the total amount of gratuity will be Rs 8,65,385.
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Gratuity on job for how many years
If the employee in a company completes more than four and a half years i.e. 4 years 7 months, then in this situation the last year is considered as the full year of the employee. That is, if the employee works for more than 6 months in the last year, then he is given gratuity by the company. However, it is not necessary to have completed 5 years of service for the gratuity amount to be paid in case of death or disability.
Tags: Ceiling of tax-free gratuity, financial institutions, Gratuity, How to earn money, Personal finance
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