How To Calculate Gratuity ?
Gratuity is an advantage to the employees who worked in an organization a long period of time. Gratuity is a certain amount that an organization pays to the employees who works in that organization continuously minimum of 5 years duration.The organization pays to the employees at the end of retirement or at the time of their resignation. How much amount the employees collected is based on some calculations calculated by Gratuity calculator.
- The formula for calculating gratuity amount is: Gratuity = [Monthly Salary x 15 days x No. of yrs. of service]/26
- Any employee should take the maximum amount of gratuity is 3.5 lakhs only.
- At the time of calculating gratuity, the no.of years of services should be rounded. For example, if you have the 7 years and 9 months, then you figured it as 8 years.
- The gratuity received under the Act is tax-free to the extent that it does not exceed 15 days’ salary for every completed year of service.
- This tax-free ceiling applies to the aggregate of gratuity received from one or more employers in the same year or during different years.
- This gratuity calculation is applied only for Indian people.
- Some persons get the gratuity amount when he/she is died or disablement, Even if the person has not completed 5 years of service.
- If an organization not pay the gratuity amount to the employees, then they get the punishment of imprisonment up to 2 years or the fine up to Rs.20,000.