How much gratuity will you get on leaving the job? This is how the calculation is done
The central government has given big gifts to private and public sector employees. Gratuity up to Rs 20 lakh has now been exempted from tax for private and PSU employees as well as central government employees. So far this limit was Rs 10 lakh. The government will soon introduce a bill in Parliament for this.
The government’s decision will benefit about 50 million people working in the private and public sectors. The Seventh Pay Commission constituted by the Central Employees had recommended raising the gratuity limit to Rs 20 lakh. On the basis of which the Center and some state government employees have already applied. Read also: Download jio pages Indian Browser
The Gratuity Payment Act (1972) applies to organizations with 10 or more employees, according to a statement from the government. The main purpose of which is to provide financial security to the employees after retirement. Often an employee retires before the stipulated time limit for retirement due to disability or any other reason. Gratuity can be a major source of income.
This is how gratuity is calculated:
According to the law, if an employee has been working in any organization continuously for at least five years, the company has to give him a gratuity. For each year of service the company has to pay the amount equal to 15 days of the final wage. Read also: Diwali Crackers app for Diwali
Wages include basic salary, dearness allowance and commission. In addition, if a person works for more than 6 months, a full year is counted for his gratuity. For example if a person works continuously for 7 years and 6 months then the gratuity will be paid for 8 years.
One month’s work counts as 26 days for gratuity calculations. For the calculation of 15 days salary, the monthly salary is multiplied by 15 and divided by 26. This number is multiplied by the number of years of service and the amount received is paid in the form of gratuity. Read also: Download face changer app
If the employee dies:
This does not apply to an employee who dies before five years of service under the minimum 5 year rule. The remaining amount is to be paid by the company to the legal successor of the employee. Each of these payments must be made within 30 days of the employee’s final work day. If the payment takes more than 30 days, interest is due on the amount as per the law.