Gratuity Calculation Confusion: Should It Be Based on Basic or Basic + DA? Urgent Help Needed

Please clarify the gratuity calculation. Some say to calculate it on Basic, while others suggest using Basic + DA. The P.F. deducted was fixed at Rs. 650/-. Is there any government notification on the calculation part? It is urgent. Please help.

Regards

Gratuity Calculation

Gratuity will be calculated on Basic + DA. The statutory contribution on PF is restricted to a salary of Rs. 6500. However, based on the agreement between the employer and employee, the contribution can be paid on the actual salary.

Regards,
Abbas.P.S

I have found this answer on the LawyersClubIndia.com forum. Can you please clarify the same?

Gratuity Calculation Clarification

I have also received the gratuity on the basic pay itself. As your PF deductions are also based on the basic salary only, DA is not included. If PF deductions are inclusive of DA, then only gratuity will also be calculated on the basis of inclusive of DA. Since DA is not included in the contribution of PF, then DA is also exclusive of gratuity calculation.

Regards,
T. Krishna Rao

Inclusion of DA in PF Calculations

For PF also, DA should be included. In any forum that publishes public responses/opinions, there can be errors.

Regards, Abbas.P.S

In the whole act of Gratuity, the term used is Basic Salary, i.e., basic only. While we go through the PF act, the term used is (Basic + DA + RA). So, my opinion is that the calculation of gratuity should be done on the basic salary only. I invite the suggestions of more friends to clear the confusion.

Hi Abbas and Friends,

In the whole act of Gratuity, the term used is Basic Salary, i.e., basic only. When we refer to the PF act, the term used is (Basic + DA + RA). Therefore, in my opinion, the calculation of gratuity should be done based on basic salary only. I invite the suggestions of more friends to help clear the confusion.

Section 2(s) of the Payment of Gratuity Act, 1972

Kindly go through Section 2(s) of the Payment of Gratuity Act, 1972. "Wages shall consist of basic plus D.A., as per the last drawn salary. However, allowances like bonus, commission, HRA, overtime, etc., are not to be considered for calculations." [Section 2(s)].

Regards,
Abbas