Understanding Gratuity: How Is It Calculated and What Does the Gratuity Act Say?

Gratuity Calculation and Gratuity Act

Thank you for your message. I would be happy to assist you with the calculation of gratuity and provide information on the Gratuity Act, including any recent changes.

Gratuity is a significant aspect of employee benefits, and understanding its calculation and legal framework is essential for both employers and employees. I will break down the calculation process and explain the key provisions of the Gratuity Act to ensure clarity on this important topic.

Please feel free to ask any specific questions you may have regarding gratuity, and I will do my best to provide you with accurate and helpful information.

Thank you.

Welcome to CiteHR

The calculation of gratuity is to be made as per Section 4 of the Payment of Gratuity Act, 1972. Changes in the definition of the employee and the gratuity payment limit have been noticed during the last twelve months.

Regards,
R.N.Khola

The calculation formula you provided is as follows: (average last 3 months drawn basic X 15 X Number of years) / 26. However, it is important to note that the employee must complete a minimum of 5 years of continuous service in the organization. The current ceiling for gratuity is ₹10,00,000, whereas it was previously ₹3.5 lakh.

Regards,
Ramnath

The formula for calculating gratuity is the last pay drawn by the employee divided by 26, multiplied by 15, and then multiplied by the number of completed years of service. The maximum gratuity payable is three lakh fifty thousand, but the Payment of Gratuity Act was amended, increasing the amount to exceed ten lakh rupees.

Gratuity Act Amendment India 2010 (Gratuity Calculation and Payment). This is good news for all employees, especially government employees. The Gratuity limit has been raised from 3.5 lacs to 10 lacs. This will give an advantage to both private and public sector employees. According to this new amendment, the 10 lacs on gratuity is tax-free. I have given the details of the new Gratuity Act Amendment India 2010 and Gratuity calculation below:

On Thursday, in the lead of PM Manmohan Singh, this decision was taken at a cabinet meeting. This proposal of the Labor and Employment Ministry has been given approval. Although many state governments have provided this type of advantage earlier, it is a better decision regarding the gratuity act to raise the Gratuity limit.

CCEA has taken a decision to open the 137 General Nursing and midwife schools to remove the scarcity of nurses and midwives. These schools will be established in Bihar, Chhattisgarh, Madhya Pradesh, UP, Uttarakhand, Rajasthan, Orissa, Himachal Pradesh, and others. An amount of 1370 crores will be spent on this planning.

For the Gratuity calculation, the gratuity calculation formula is:

1. Basic/26 x 15 days x number of years of service

OR

2. BASIC + DA (Last Pay drawn) X 15 /26 X No. OF YEARS WORKS

Gratuity is to be paid to any employee only if he provides service for a minimum time of five years at a stretch with his employer in the company. The Gratuity calculation is done based on the last average remuneration drawn and time in years served by an employee.

For more details, visit labour.nic.in/act/acts/RulesofPaymentOfGratuity.doc

Gratuity Calculation

The calculation for gratuity is as follows: 26 days divided by the basic salary, multiplied by 15, and then multiplied by the number of years of service.

Regards,
Octavious

Hi Yogesh,

Please find the gratuity calculations below:

((Last month's drawn basic + D.A) X 15 X Number of years completed years of service)/26

However, the employee must complete a minimum of 5 years of continuous service in an organization, and the recent ceiling is 10,00,000/- as earlier it was Rs. 3,50,000/-

Regards,
Madhu Mohan
Bangalore