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Gratuity Calculation Formula in India 2013 | Gratuity calculator

 Introduction

Gratuity is the payment made by the employer to his ex- employee for his past services. Gratuity is similar to a  gift given by employer for appreciation of past services of his employee . The technical definition of gratuity given by ICAI is “gratuity is a  voluntary payment made by an employer  in appreciation of services rendered by employee .

Who is eligible for Gratuity ?

As per Payment of Gratuity Act  1972, any employee who has been in continuous service for 5 years is eligible for gratuity .

During the above mentioned 5 years , employee is eligible for casual leave and sick leave without affecting his eligibility.

In case of death of an employee , the above condition 5 Years of continuous service is not applicable i.e. even if an employee dies

after 2 years of service , he/she is still eligible for gratuity .

 


 

 How is gratuity calculated?

 

a) Gratuity calculation formula for employees receiving monthly salary

 

(15/26) * Last Salary Drawn * Completed years of service

Gratuity calculation formula

When calculating completed years of service , if an employee worked for more than 6 months , it will be considered as full year .

Example : Employee worked for 14 years and 7 month , then completed years of service = 15 years

Example: Employee worked for 14 years and 5 months ,then completed years of service = 14 years

Example: Employee worked for 14 years and 6 months, then completed years of service = 14 years

Last salary drawn = basic salary + dearness allowance

 

b) Gratuity calculation formula for piece rated employees

( workers receiving payment on the basis of the number of pieces produced )

Gratuity shall be calculated as follows:

 

Last drawn wages *15/26 *completed years of service

 

  • Completed years of service are calculated in the same way as for employees receiving monthly salary.
  • Last drawn wages are computed by taking average of the total wages received by him for a period of three months immediately preceding the termination of his employment. While computing daily wages, the total wages of last three months is to be divided by number of days the employee actually worked, and not by the number of days or the number of working days in the said period of three months .

Example : A piece rated employee received Rs. 30,000 during the last three months before his retirement. The factory had 60 working days in the last three months but the employee came to work for only 30 days.

Last salary drawn will be calculated as rupees 30,000÷30= Rs. 1000

 

 


 

Maximum Amount of Gratuity

The amount of gratuity cannot exceed Rs 10,00,000 (10 lacs) . Even if it exceeds , maximum amount payable by employer shall be Rs 10,00,000

 


 

When is Gratuity Payable ?

Gratuity is Payable on employee’s Supernnuation , Retirement Or death (whichever is earlier).


 

Nomination

In case of death of an employee , gratuity is paid to their legal heirs (nominees)

Every employee who has completed one year of service is required to make a nomination. This nomination should be made within 30 days of completion of first year of service.

This nomination should be made in the favour of a family member. A nomination made in the name of any other person is void. However, if the employer does not have any family when he can make a nomination in favour of any person. But the employee will be required to make a fresh nomination within 90 days of acquiring a family.

Nomination form


 

Payment of Gratuity

After Gratuity becomes Payable , employer is required to pay it within 30 Days as per the provisions of Payment of Gratuity Act  1972 .If the employer fails to pay gratuity within 30 days then, he shall be liable to pay simple interest at the rate notified by central government

 

Recommended :  Learn How is gratuity Taxed  Income tax payable by employee on gratuity !

By Paramjit Singh

 

259 Responses to Gratuity Calculation Formula in India 2013 | Gratuity calculator

  1. my date of joining is 08/01/2009 & continuing till dade
    pl calculate my gratuity as informassion given bellow

    Basic is 19800 and Last month Salary was 42176 only

  2. Hi ,
    I worked for KFC restaurant from past 5 years my last salary basic 6500. can you tell me how much gratuity i could Expect??
    Thanks in Advance..
    please reply to my mail id
    Regards
    Harsha

  3. completed 20 years in multi national company pls calculate my gratuity. net payment-45000/-

  4. if a person is absent for nearly year ie leave without pay and if he has completed 20 years before going on leave how will his gratuity years be calculated

  5. ashish kumar namdev

    sir
    i am working in power plant o@M company . 7 year completed this company. pls sir caculed my gratuity

    my net pamet 16440 & basic&da 6500

  6. ashish kumar namdev

    sir
    i am working in power plant o@M company . 7 year completed this company. pls sir caculed my gratuity

  7. Sanjay Malgundkar

    Please whether Gratuity amount i.e.Rs.10 lakh is taxable? What is the exemption limit?

  8. i wanted to know if an employee resigns who had worked for more tha 10 years without giving the proper notice period i.e of 1 month (actually the company in which i work has 2 months notice period & as per the HR policy employee have to work the 2 months notice period compulsarily) the the company will give the gratuity or not.

  9. Dear Sir,

    Greetings The Day,

    I was worked in one organisation ( Properitor Private Company)
    From June 2003 to April 2008. Can you please confirm me either I am eligible for Gratuity or not.

  10. Hi,

    My joining date is 28/08/2009 and my last date is 15/04/2014. Am i eligible for gratuity?

    regards,
    Joseph

  11. Hi Sir

    I join ibm 9th June 2009 presently I am working there please tell me i ilegible for graguity or not

    Thanks,
    Harpreet Singh

  12. (15/26) * Last Salary Drawn * Completed years of service

    as per above formula, the days which is mentioned as 26 is it only for govt organizations, since in MNC the working days is only 22 (excluding saturday’s and sunday’s)…

    For MNC shall we calculate as below

    (15/22) * Last Salary Drawn (i.e., Basic + DA) * Completed years of service

  13. Krishan Chander Gupta

    Is gratuity payable for services rendered in government undertakings

  14. Is it possible to get Gratuity if a person has worked for 4 years 11 months 16 days.

  15. Sir plz reply of my query

  16. DATE OF JOINING 17 FEB-2009
    TILL NOW I M WORKING IN SAME COMPANY AND VERY SOON GOING TO COMPLETE 5 YEARS IN 1 COMPANY. BUT DURING THIS PERIOD OF 5 YEARS I HAVE TAKEN ALMOST 1 MONTH PERSONAL LEAVE APART OF CL AND SL AM I ELIGIBLE OF GRATUITY ?

  17. Dear sir, my december salary 30600/- (basic salary 9000/-+medical 5400+ house rent 5400/-+ education 5400/- + allowance 5400/-) I am waorking 7 years. plz suggest me what is my gratutity.

  18. Dear Sir/madam, I have taken total 29 days personal leave apart of sick and casual leave during my 5 years of continues service. Am I eligible for my gratuity for my 5 years of service.
    Regards
    Mohit Saxena

  19. Sir/madam is personal leave also affected our gratuity i mean if a person taken almost 1 month person leave so is he or she will be eligible for gratuity

    regards
    mohit saxena

  20. Ram Naresh Sharma

    Sir
    i joining com 01-01-2009
    and Leave 31-12-2013 Till
    Pls tell me My Gratity.Yes Or No

  21. Julfikar

    Hi, I have join my company 25th March 2009 to till date, Am I eligible for Gratuity. Second What will be my Gratuity Amount If I am drawning salary of rs.9000(in hand) if I leave this company on 1st Feb’2014. My current Basis Salary is 3500.

  22. what is maximum limit of gratuity in 2014-15 abasement year

  23. I am working 26 years in a limited company.My company is selling some of our products to some other company and asking all employees (related to those products sold)to go to new company. Also saying seniority and gratuity will be transferred to new company.can it be true? please advice

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