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Pls Clarify Provision of Gratuity Act in this regard?

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15607 Points)

07 December 2010

Central Govt Employee...(Railway)

Last Drawn Basic:- 18724/- DA : 6552

Completed years of service :35.5 years

Gratuity Actually Recd: Rs. 833924/-

(After the death of Employee)(not due to accident at workplace)

As per Calculation: Gratuity (18724+6552)/26*15*35=510380/-

My Question is whether a person can recieve excess Gratuity...........?

I guess calculation here is made as

(Basic+Da)*35 years..

So, is there any clause where in employer can pay gratuity for actual yr of service instead of taking 15 days for each year.....?

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7 Replies

CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN") (114225 Points)
Replied 07 December 2010

Calculation of the amount of gratuity payable
According to the law, the amount payable as gratuity is equivalent of half month's salary for every full year of your employment or Rs 10 L, whichever is lower. This is the minimum amount payable under the law. Some companies may pay a higher amount. This upper limit depends upon the company's policy.
For example, if you have put in 10 years of service before you resign from the company, you are entitled to the lower amount of:

An amount equal to 5 months' salary or Rs 10L

However, if your company has a policy to pay its employees a maximum of Rs 20L as gratuity, the amount payable to you when you resign after 10 years of completed service will be the lower amount of:

An amount equal to 5 months' salary or Rs 20L.

3 Like

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CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN") (114225 Points)
Replied 07 December 2010

Calculation of the amount of gratuity payable
Your last paycheck before you retire or resign is the amount you should consider in your gratuity computation. Also, only your 'Basic' and 'Dearness Allowance (DA)' should be taken into consideration.

For example, assuming Anil retires this year after completing 30 years with his company and his last pay check looks like the following, let us calculate the amount of gratuity that Anil's company should pay him:
Basic: Rs 60,000
DA: Rs10,000
HRA: Rs 26,000
Education Allowance: Rs 5,000
Travel Allowance: Rs 15,000
Gratuity payable: (Last month's salary / 26) * 15 * Completed years of employment

Last month's salary to compute gratuity = Basic + DA = Rs 70,000.

Gratuity payable = (70,000 / 26) * 15 * 30 = Rs 12,11,538

Since there is a limit of Rs 10L, Anil is entitled to receive Rs 10L towards gratuity. If his company has a policy to pay gratuity up to an amount of Rs 15L, then Anil's gratuity benefit will be Rs 12.11L.

3 Like

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15607 Points)
Replied 07 December 2010

Thanks Dear Sanjay Sir for Nice Explanation.

CS LLB Pulkit Gupta (https://www.facebook.com/pages/Life-and-Promises/553962034682487) (16631 Points)
Replied 07 December 2010

I think Sanjay has very beautifully explained the concept and there is no need of any further explanation...!!!

(Guest)

Originally posted by : pulkit gupta
	I think Sanjay sir has very beautifully explained the concept and there is no need of any further explanation...!!!