Hi,
The gratuity computation is as follows:
Basic salary as on 31st Mar+DA * (15/26) * No. of yrs of service.
Hope you are aware that gratuity is payable to a resigned employee only if he has completed 5 years of service. However, finance department may need to know the gratuity amount to provide provision for gratuity payment. Here, gratuity is computed for all employees irrespective of their years of service, but not paid out.
Eg 1:
An employee joins on 1st March 2002 and resigns on 26th December 2008. His basic salary as on 31st Mar 2008 is 15000.00, then how do you calculate gratuity
Ans:
1st March 2002 to 26th December 2008 = 6.8 years of service
15000 * (15/26) * 6.8 years = 58846.00
If there is a increase in basic salary during the year, the same can be considered proportionately.
Rgds,
Sharath
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