5 important features of Gratuity & Gratuity Calculation?

When you are getting your final settlement from your organisation or company you will get some additional money from your company as Gratuity. Yes most of us not know much about gratuity and its calculations. So here we have a solution for that.

Basic Information about Gratuity

It’s purely a retirement benefit for an employee; it will definitely help the employee after retirement. When Gratuity is payable to an employee and when you are entitled receive the benefit? At the time of retirement, also when an employee completing 5 years of continuous services.

Note: here one year of continues services means 240/190 working days (above the ground / below the ground) in a year. Under section 10(10) of income tax act.

Important Features:

1)    It is payable a person on

·         Resignation

·         Termination on account of death or disablement due to accident or disease

·          Retirement

·         Death

2)    To all Government & Private companies employing / were employed 10 or more persons on any day in preceding 12 months and to all employees – workers as well as persons employed in administrative and managerial capacity.

3)    Gratuity is payable only after employee completes five years of continuous services. In case of death and disablement, the condition of minimum 5 years is not applicable.

4)    Gratuity is payable at 15 days wages every year of completed services in 5 years, if the employee has completed more than 6 months, it will be treated as full year for gratuity purpose.

5)    In case of seasonal establishment, gratuity is payable at 7 days wages for each seasons.

Gratuity calculation:

{(Basic + all DA)/26}* no of years*15

 

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