Gratuity amount! This is how you can calculate your balance

Gratuity amount! This is how you can calculate your balance

Gratuity is a monetary benefit that an employee gets from his/her employer for services rendered to an organisation after working for over 5 years. According to Payment of Gratuity Act, 1972, all the employees who are engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments, in which ten or more persons are employed, are entitled to get gratuity from their employer.

Generally, gratuity is paid at the time of retirement, but it can be paid even before that period subject to certain conditions. It is defined as a major benefit plan as job perks received from an employer, who can use a formula to calculate this amount. Notably, the payable gratuity depends upon the last drawn salary and years of service.

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You can calculate your gratuity balance in three ways:

1. You can check with your employer as the HR department of the organisation keeps complete information related to you. You can approach your HR department to inquire about the gratuity balance or amount.

2. According to the Income tax department website- www.incometaxindia.gov.in, you can visit the website and click at ‘Tax Tools’ option, wherein, you will find ‘Gratuity’ as one of the available options. The calculator on the page will compute the amount of gratuity pay with respect to values you put. These values include assessment year, type of employer, gratuity received, exempted gratuity and taxable gratuity.

3. Otherwise, you can calculate it using the formula. In order to calculate gratuity, use the formula: 15 X (last drawn salary) X (tenure of working)/26. If X’s (employee) last drawn salary is Rs 50,000 per month and he/she has worked with XYZ company for 30 years, the gratuity will be calculated as: (15 X 50,000 X 30)/26= Rs 9,37,500. Under this formula, the time period of more than six months is considered as one year.

Notably, if the last few months in the last year of employment are more than 6 months, it will be rounded to next number. Suppose your tenure of service is 16 years 7 months, you will be able to receive gratuity for 17 years. Otherwise, you may get the gratuity for 16 years if it happens to be 16 years 4 months.

Source:- zeebiz

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