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Dear All ,
There is no such formula to calculate gratuity .It differs from company to company as well it depends on the policies.But one thing every body should keep in mind is that if gratuity is mentioned in the offer letter then there will be a deduction of 4.81% from the basic salary .

From India, Madras
Dear Sir,
The normal procedure to calculate the gratuity is to take into account Basic salary Plus Dearness Allowance divided by 26 days this will give the salary per day and this figure is multiplied by 15 days for one year, similarly multiply for ( number of years service) five years it would be calculated.

From India, Bangalore
to calculate grauity, the formula is
basic salary * 15 (number of days for grauity paid) / 26 (number of working days in a month) * number of years of service.
suppose Basic Salary is Rs 7000/-. To calculate :- 7000*15/26*5

From India, New Delhi
Hi Dear,
Gravity is Calculated always 26days in any type of organisation.
Its Formula is:
Gravity= 15/26*How Many Completed Year*Last Basic Drawn.
Hope You Understand it.
Lokesh Yadav

From India, Delhi
Please do not get confused with Gross and the Total Cost to the company (CTC); when you say CTC it includes every single expense that you spend on your employee
If it is Gross, then you do not need to mention or include the Gratuity
Hope this clarifies.......

From Saudi Arabia, Jiddah
Dear Tinwkle, Please find the formula to calculate Gratuity. Current Basic*15/26*No. of years worked
From India, Secunderabad
Hi Daisy,
Giving due respect to every one's view mentioned above I want to add on one point that CTC ie; Cost to Company includes every single penny a company spends on its employee. In that case, Gratuity is no doubt a part of CTC. But, Gratuity is payable only after completion of 5 years of service to any employee, and those employees who attain the age of superannuation (58 years) cannot claim for Gratuity Amount. It is company's sole interest if it decides to give Gratuity Amount to this employee or not after completion of 5 consecutive years. If the employee leaves the organization before completing five years then he shall be deprived of the amount of gratuity which he can get only after completion of 5 continuous years of service in any organization.
Vinisha Wilfred

From India, Hyderabad
Dear All,
Good Morning . . . .
I like to point up some of my view points on the said topic.
Whenever we talk about CTC it may differ from CO. to Co. and place to place.
Usually following components are part of CTC.
1. Gross Salary
2. PF & ESI (if Applicable)
3. Bonus (if Applicable)
4. Medical Reimbursement
Most of the cos. are taking following components also as a part of CTC
1. Leave
2. Gratuity
3. Any Insurance Policy Premium
4. etc. . . . . .
But in our opinion the above components should not be part of CTC. As a company providing these benefits to employees as part of Retainment policy.
In addition we like to share that we are projecting on Compensation and Benefits in India. Pls. contact for more support and guidance for HR PROCESS : .
Regards . . .

From India, New Delhi
What to include in CTC and what not is the prerogative of the HR Function of the company that is decided after discussions and agreement with the management. The key is how you explain the CTC to an employee while hiring. There should be clear communication about this while fixing the salary so as to avoid confusions later.

As a normal term, CTC should include all the monetary benefits given to an employee under various heads, including gratuity. Some companies do not include gratuity part in the CTC, though it is advisable to include. So, components of CTC are decided based on the objectives of the organization as to why they want to project CTC.

Some companies have developed a more expanded form in this respect called "Total Cost To Company (TCTC)" where they capture even the indirect expenses on an employee, viz; pro-rated facility expenses (share of the office premises expenses that are rentals, electricity, other consumables etc.), pro-rated value of work related electronic equipment given to an employee, pro-rated communication expenses, pro-rated expense of employee events / corporate parties, expenses against employee gifts, etc. etc. All these depend on the organizational objective as to what are they going to use this information for.

So, the first step to decide your company's CTC components may be to do a brainstorming with the leadership team and clear the objective as to why you want to introduce this concept.

MK Saseedharan

From India, Delhi
Please go through following link.
Madhu.T.K: CTC Vs BTC

From India, Kannur

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