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Friday, November 8, 2019

How to Calculate Graguity ? Graguity Calculator after Retirement

How to Calculate Graguity ? Graguity Calculator after Retirement.
Gratuity is a benefit received by an employee rendering services to an organization. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee gets gratuity when he / she resigns, retires or is laid off. In case of death or disablement there is no minimum eligibility period.

How Gratuity is Calculate
  • The gratuity amount depends on the tenure of the service and the last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
  • According to this formula, the time period over six months or more is considered as one year.
  • This means that if you have completed five years and seven months of service, the number of years would be considered as the gratuity benefit of calculation for six years.
  • On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years.
  • An employer can however give higher gratuity than the amount under the prescribed formula.
  • Officials and employees of the Gujarat government corporation, board and corporation also now receive a graduation in the amount of Rs 10 lakh, instead of the standard of all employees of the government of Gujarat, they will also be eligible to receive a graduation of Rs 20 lakh and as per the file, department of the board, corporation or corporation The state government will approve accordingly to get this approval. 
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Recently, we had approved the proposal of the Gujarat Industrial Development Corporation, which is the GIDC's corporation, and now the rest of the corporations will propose to the government and the finance department will scrutinize it.

Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended increasing the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.

Income Tax Treatment of Gratuity
For government employees, the entire amount of gratuity received on retirement or death is currently exempt from income tax.

In case of non-government employees, gratuity on income tax rules is applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.

For non-government employees covered under the Gratuity Act, any gratuity received on the income tax exemption is at least the following:
Maximum amount specified by the government which is currently Rs. 10 lakh
Last drawn salary X 15/26 X years of service
Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr Ashish, for example, is Rs. 60,000 (per month) and he has worked for 25 years. According to the gratuity the formula is Rs. 8.65 lakh but he has actually received gratuity of Rs. 12 lakh.

IMPORTANT LINK FOR Graguity Calculator
Click here Calculator

So for income tax calculation, Rs. 8.65 lakhs will be considered for exemption. So Mr Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh - 8.65 lakh).

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