Know full details of gratuity, calculate
Come in this post, I am going to give you complete information, if you are interested in this field then this post is for you only. Whatever information you want is hidden inside this post, so let’s know the complete information.
The salaried employees working in any company or organization are given the benefit of gratuity after spending a certain amount of time in that company or organization. According to the Gratuity Act 1972, an employee has to work in that company for at least 5 consecutive years to get gratuity. If it is less than one day, then he cannot be given the benefit of gratuity. The amount of gratuity is paid on the retirement, resignation or termination of the employee.
As per Section 4 of Gratuity, in case of termination of service due to death or disability, the condition of continuous service of five years is not applicable. In case of death of the employee, the amount of gratuity will be paid to the nominee or legal heir. Under the Gratuity Act 1972, all employees of the organization are entitled to receive gratuity. This includes factories, mines, oil fields, plantations, ports, railways, motor transport, companies, shops and establishments employing more than 10 workers.
what is gratuity
If you are working in an organization, then you are given gratuity in addition to salary, pension and provident fund. Gratuity is a reward given to an employee by the company. If the employee fulfills the rules of the company, then he is given the benefit of guaranteed gratuity. A small part of the gratuity is deducted from the salary of the employee, but a large part is given by the company.
An employee can apply anytime within 30 days of the gratuity amount being payable. On the other hand, if the application made by the employer after 30 days also cannot be rejected. The employer has to inform the amount due and the date of payment within 15 days from the date of receipt of application for gratuity amount. However, in case of rejection of the application, the employer has to give the reason for the rejection of the application for gratuity.
How is Gratuity Calculated?
The amount of gratuity is decided on the basis of the service tenure of the employee and his last salary deduction. Also, it is calculated on the basis of basic salary and dearness allowance.
For the calculation of gratuity, every month is considered as 26 days for the organizations covered under the Gratuity Act 1972. Whereas gratuity is paid for every 15 days for every completed year of service. In the last year of employment, if an employee works for more than six months, he will be added to the next.
For example, it can be understood that if an employee works for a total period of eight years or seven months, then it will be considered as 9 years for gratuity calculation.
what is the formula for gratuity
Last Salary (Basic Salary Plus Dearness Allowance) * Total Years of Service * 15/26.
Explain that the employees of the organization not covered under the Gratuity Act are also eligible for payment of gratuity. In such cases, the total number of days in a month would be 30.
tax exemption under gratuity
All gratuity payments received by government employees are entitled to full exemption from income tax. In the case of private sector employees, the Income Tax rules on gratuity are applicable on the basis of whether the employees are covered under the Gratuity Act, 1972 or not.