Gratuity calculation: Gratuity is more than a bonus; it is a legally supported reward for your years of dedicated work. After years, even decades, of effort,
time, and commitment devoted to your career, that point arrives where you bid it adieu (say goodbye) due to retirement, resignation, or something unexpected. You deserve more than the paycheck on your last day. That's where gratuity enters the picture, a sum of money that says "thank you." But many wonder: Am I entitled? How much will I actually receive? On that note, let’s check how much you will get if your last-drawn basic salary is Rs 62000 and you have completed around 10 years of service. The formula mentioned in the article can help you find out your gratuity amount based on your basic salary and service here. Therefore, read the article thoroughly to understand the concept.
What is Gratuity?
Gratuity is a statutory payment in India designed to provide financial incentives to long-term employees at the time of their retirement, resignation, death or disablement. Regulated under the Payment of Gratuity Act, 1972, it has explicit provisions regarding eligibility, amount payable, and tax treatment.
Gratuity eligibility
The organisation must be covered by the Act. These include factories, mines, oilfields, plantations, ports, railway companies, and shops or establishments in which 10 or more persons are employed on any day in the preceding twelve months.
The employee must have completed continuous service of not less than five years under that employer. Continuous service includes periods of authorised leave, layoff, etc.
However, the five-year minimum does not apply when employment ends because of death or disability. In those cases, gratuity is payable regardless of the service period.
Gratuity Calculator condition: Rs 62000, last drawn basic Salary, 10 years of service
Based on the gratuity calculation formula, if your last drawn basic salary is Rs 62000 and you have completed 10 years of service, the calculation will be:
- Last drawn salary = Rs 62,000
- 15/26 of salary = (62,000 × 15)/26 = Rs 35,769 (approx)
- Years of service = 10
- Gratuity amount = 35,769 × 10 = Rs 3,57,690
So, after 10 years of service, you may be entitled to approximately Rs 3.57 lakh corpus as gratuity.
How is gratuity calculated?
The gratuity formula for employees covered under the Act is:
Gratuity = (Last Drawn Salary × 15/26) × Number of Years of Service
62000x15/26x10
Here, the last drawn salary includes basic salary plus dearness allowance, if any. The factor 15/26 represents 15 days’ salary for every completed year of service, considering 26 working days in a month.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
