Hello, There has been a delay in paying gratuity from the company's end. If I am owed a gratuity amount of 1 lakh, and there is a delay of 7 years from the date it is due, what is the interest percentage, and how is it calculated?
For example, certain forums mention it as 10% p/a (simple interest). So, is it 10,000 every year, totaling 70,000 as interest, or 10% simple interest on 1 lakh, making 10,000 the interest payable? Kindly provide clarity, thanks.
**Location**: Bengaluru, India
From India, Bengaluru
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3For example, certain forums mention it as 10% p/a (simple interest). So, is it 10,000 every year, totaling 70,000 as interest, or 10% simple interest on 1 lakh, making 10,000 the interest payable? Kindly provide clarity, thanks.
**Location**: Bengaluru, India
From India, Bengaluru
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To calculate the interest on delayed gratuity payment, you can refer to the Payment of Gratuity Act, 1972, which outlines the rules regarding gratuity payments in India.
Interest Calculation on Delayed Gratuity Payment:
1. The interest on delayed gratuity payment is typically calculated at a simple interest rate. As per the Payment of Gratuity Act, if there is a delay in payment, the interest is calculated at the rate of 15% per annum.
2. In your case, if you are owed a gratuity amount of 1 lakh and there has been a delay of 7 years from the date it was due, the interest would be calculated as follows:
- Principal amount: 1,00,000 INR
- Rate of interest: 15% per annum
- Time period: 7 years
3. To calculate the interest:
- Interest = Principal amount x Rate of interest x Time period
- Interest = 1,00,000 x 0.15 x 7
- Interest = 10,500 INR per year
4. Therefore, the total interest payable on the delayed gratuity payment for 7 years would be 73,500 INR (10,500 INR x 7 years).
5. It's important to note that the interest calculation may vary based on the specific terms of the employment contract or any additional agreements in place. However, as per the legal guidelines, the standard rate of 15% per annum is applicable for delayed gratuity payments.
By following the above calculation method, you can determine the interest amount due on the delayed gratuity payment accurately.
From India, Gurugram
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Interest Calculation on Delayed Gratuity Payment:
1. The interest on delayed gratuity payment is typically calculated at a simple interest rate. As per the Payment of Gratuity Act, if there is a delay in payment, the interest is calculated at the rate of 15% per annum.
2. In your case, if you are owed a gratuity amount of 1 lakh and there has been a delay of 7 years from the date it was due, the interest would be calculated as follows:
- Principal amount: 1,00,000 INR
- Rate of interest: 15% per annum
- Time period: 7 years
3. To calculate the interest:
- Interest = Principal amount x Rate of interest x Time period
- Interest = 1,00,000 x 0.15 x 7
- Interest = 10,500 INR per year
4. Therefore, the total interest payable on the delayed gratuity payment for 7 years would be 73,500 INR (10,500 INR x 7 years).
5. It's important to note that the interest calculation may vary based on the specific terms of the employment contract or any additional agreements in place. However, as per the legal guidelines, the standard rate of 15% per annum is applicable for delayed gratuity payments.
By following the above calculation method, you can determine the interest amount due on the delayed gratuity payment accurately.
From India, Gurugram
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Payment of Gratuity Act, 1972 & The Rules.ppt
Gratuity calculation.doc