Gratuity Calculation: Under the Payment of Gratuity Act, 1972, an employee becomes eligible for gratuity after completing five years of continuous service
with the same employer. If an organisation comes under the Payment of Gratuity Act of 1972, it cannot exclude itself. Therefore, in this article, we will find out the gratuity amount of someone with a basic last drawn salary of Rs 52000. Here, we will assume that the employee has served for 5 years. However, the minimum continuous service required is 4 years and 240 days under India's Payment of Gratuity Act, 1972 (in many court rulings, this is considered equivalent to 5 years). Dig into the story to find out your gratuity amount. Also read: EXPLAINED: What is Section 80C in Income Tax Act and how can you save up to Rs 1.5 lakh yearly?
What is gratuity?
Gratuity is a monetary benefit given by an employer to an employee as a token of appreciation for their continuous service.What decides the gratuity amount?
Years of service and the basic salary drawn for the last time by an employee are taken to determine the gratuity amount.In what scenarios can gratuity be paid?
1. Retirement: On retirement from service2. Resignation: Upon completion of 5 years of continuous service
3. Death or Disability: On account of death or disability through accident or disease while in service
4. Superannuation: On attaining superannuation age (a kind of retirement benefit)
What is formula to calculate gratuity?
(Last Drawn Salary x Number of Years of Service) X 15/26Here, 15 refers to 15 days’ wages per year, and 26 refers to 30 days in a month, excluding Sundays.
What will be your gratuity on Rs 52000 basic salary for 5 years of service?
Let’s calculate gratuity for an employee with a basic salary of Rs 52000, 5 years of service. Gratuity = (52000 × 5 × 15) ÷ 26Gratuity amount: Rs 1,50,000.
