Gratuity Calculation Confusion: How to Handle DA for Mid-Month Retirees?

Hi friends, I am working in a limited company as an Assistant Manager in the Accounts & Administration department. I need your help with the following query:

Gratuity Calculation Query

If a person retires in the middle of the month, when the Dearness Allowance (DA) is variable, should Gratuity be calculated based on Basic Salary + Previous month's DA or Basic Salary + Current month's DA?

Please assist me with this matter. Thank you.

It would be calculated as per the previous month's Basic + D.A x 15/26 x No. of years of service (minimum qualifying service put up is 5 years).

The maximum amount payable is 3.50 Lakhs.

Hope this clarifies your query.

Gratuity is to be calculated on the last drawn salary (Basic + DA), and the maximum amount of gratuity as per the Payment of Gratuity Act is Rs 10 lakhs. However, any higher amount can be paid if the employer is willing to do so. The additional amount over and above what is stated above will be taxable in the hands of the employee and the employer.

Regards,
Madhu.T.K

Gratuity = Last monthly wages x 15 x years of completed service.

Note:

(i) Wages = Basic Wages + current DA.
(ii) Maximum gratuity payable = ₹10,00,000/-

Thank you.
Regards

It would be calculated as per the previous month's Basic + D.A x 15/26 x No. of years of service (minimum qualifying service is 5 years). The maximum amount payable is 3.50 Lakhs.

Hope this clarifies your query...

Max. Amount

It's 10 lakhs for the central government and 5 lakhs for state governments. More than 10 lakhs is also permissible, provided that the amount will be taxed by the IT department.

Regards

Clarification on Gratuity Calculation

Soumik's interpretation of the maximum amount of gratuity seems to be incorrect since the Payment of Gratuity Act is not applicable to government employees. It is ₹10 lakhs for all employees who are covered by the said Act.

Madhu.T.K