Calculation of Gratuity after 7th Pay Commission
Gratuity calculator or method of gratuity calculation helps you to know your gratuity. Once you change job or retire, you are eligible to receive this tip if you served for more than 5 years. Basically, gratuity is a form of the gift received from the employer as a reward for services given to the company. The government made gratuity mandatory for companies with more than 10 employees under payment of gratuity act 1972. This post lets you know how you can know the calculation of your gratuity amount.
If you serve at one place for a longer time, you benefit due to the multiplying of various employee benefits. Provident fund, pension, and gratuity are major employee benefits in India. Employees of the government sector as well private sector are eligible for the gratuity. Learn more about checking online provident fund status with us.
Gratuity Calculation Online | Offline
Gratuity calculation is quite simple. However, there are various online calculators available today. You might use them as well. Still, we recommend you to learn the calculation without using gratuity calculator. Any programmed calculator might give a misleading amount. Moreover, it will be difficult for you to know how you arrive at the final receivable amount.
Here is how the amount is calculated through the gratuity calculator –
Note all the below information below you start calculating your salary.
- Your last drawn basic salary
- Dearness allowance
- of years served
Gratuity Calculation Formula
Find the method used for gratuity calculator. The formula is as under.
Gratuity = Last drawn salary x 15 / 26 x no. for years served
(last drawn salary should be basic salary + dearness allowance)
The amount received as gratuity is exempted from tax.
For accurate gratuity calculation, it is important that you use precise figures of your salary and DA. It is advisable to get your last salary slip and complete break up from your employer. This will help you to calculate the gratuity accurately.
Latest Updates After 7th Pay Commission
The coming of 7th pay commission has brought significant change to the amount of this benefit. The seventh pay commission suggested increasing the maximum limit of the gratuity receivable by any employee. Before 1st January 2016, the upper limit of gratuity was Rs 10 lakhs. This means if your gratuity calculation is above Rs. 10 lakhs, it is not valid. However, considering the high inflation and the increased wages, the government initiated an increase in the ceiling. With effect from 1st Jan. 2016, the upper limit is Rs. 20 lakhs instead of 10 lakhs.
However, if you feel it is better to use online gratuity calculator, you might use it from a well-reputed website. The best way is to consult your HR department and clarify any query you have. The most important factors to know are your basic salary and DA. Also, find out the exact length of your service. Employees who are hired under contractual periods are not eligible for gratuity. Please check our website for any procedure you need to know regarding aadhar card enrolment status.