Curious About Gratuity Calculations? How Is the Current Service Cost of Rs. 21,371 Determined?

How to Calculate Current Service Cost in Gratuity

1. Number of Employees: 8
Average Age: 43.75
Average Monthly Salary: 4783.87
Average Past Service: 19

2. Results of Valuation
- PV of Past Service Benefit: 456,967
- Current Service Cost: 21,371
- Total Service Gratuity: 759,298
- Accrued Gratuity: 457,786
- LCSA: 301,512
- LC Premium: 790
- Service Tax: 90

3. Recommended Contribution Rate
- Fund Value as on: 401,568
- Additional Contribution for Existing Fund: 55,399
- Current Service Cost: 21,371

4. Total Amount Payable: 77,589

I want to know how they calculate Rs. 21,371.

To calculate the Current Service Cost in Gratuity for the 8 employees in Chennai, India, the amount of Rs. 21,371 is determined based on various factors such as the average age, monthly salary, and past service of the employees. The formula for calculating the Current Service Cost involves considering the present value of future gratuity payments for the employees. This amount is influenced by the average age, salary levels, and past service duration of the employees. To arrive at the specific calculation for Rs. 21,371, the actuaries or HR professionals would have utilized the relevant formulae and data points specific to the gratuity scheme in place. It's essential to adhere to the legal requirements and guidelines outlined in the Payment of Gratuity Act, 1972, to ensure accurate and fair calculations.