General Info

Gratuity rules and calculation in india

What is gratuity in India?

It is governed by the Payment of Gratuity Act 1972. 

Gratuity is an amount of money which an employer (company/contractor) pays to his employee (the person who is doing job) in return for services offered by him to the company. 

A person is eligible to receive gratuity only if he has completed minimum five years of service with an organisation. 

Note:- as per my personal opinion, you must have the proof of your job services, either you must have salary slips or PF deduction proofs. otherwise company can deny you as a empoyee of their organization.

ग्रेच्युटी एक राशि है जो एक नियोक्ता (कंपनी / ठेकेदार) अपने कर्मचारी को उसके द्वारा कंपनी को दी गई सेवाओं के बदले में देता है। एक व्यक्ति केवल ग्रेच्युटी प्राप्त करने के लिए पात्र है यदि उसने किसी संगठन के साथ न्यूनतम पांच साल की सेवा पूरी कर ली है। यह पेमेंट ऑफ ग्रेच्युटी एक्ट 1972 द्वारा शासित है

नोट: - मेरी व्यक्तिगत राय के अनुसार, आपके पास आपकी नौकरी सेवाओं का प्रमाण होना चाहिए, या तो आपके पास वेतन पर्ची या पीएफ कटौती प्रमाण होना चाहिए। अन्यथा कंपनी आपको उनके संगठन के एक सहकर्मी के रूप में नकार सकती है।

Gratuity Eligibility Criteria

An employee gets gratuity when he/she resigns after 5 years of services in the company, or retires. In case of death or disablement there is no minimum eligibility period.

(किसी कर्मचारी को कंपनी में 5 साल की सेवाओं के बाद इस्तीफा देने या सेवानिवृत्त होने पर ग्रेच्युटी मिलती है। मृत्यु या विकलांगता के मामले में न्यूनतम पात्रता अवधि नहीं है।)


How Gratuity is Calculate


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 + dearness allowance) x number of completed years of service x 15/26.

Formula for Gratuity = n*b*15/26

Here n = tenure of service completed in the company in years

b = last drawn basic salary + dearness allowance

Note: If working period equal to or exceeds to 6 months, it will be calculated as 1 Year as per rules. If 6 Years 6months, then calculated as 7 Years.


For example

If the joining date was: 01-April-2011 and I left company on 1st-Jan-2018. So total service is : 6 Years, 9 Months, So we consider it as 7 YearsTherefore, The final Gratuity Amount  = 7x6400x15/26 =  ₹25,846/-
Formula for Gratuity = n*b*15/26Where n = tenure of service completed in the company in years =Here is 7 Yearsb = last drawn basic salary + dearness allowance =Here is ₹6,400 (As per PF Deduction (12% ) Amount ₹768

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.

To know about this calculation and rules in Hindi, just watch this below video:
https://www.youtube.com/watch?v=9d01tFyHVRg


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