Gratuity Calculation: What will be your gratuity for Rs 55,000, Rs 75,000, and Rs 95,000 last-drawn salary after 9 years and 4 months of service?
Find out your gratuity amount if your last-drawn salary is Rs 55,000, Rs 75,000, or Rs 95,000 with 9 years and 4 months of service under Gratuity Act.
Wondering how much gratuity you'll receive after working for over 9 years? This guide breaks down the gratuity calculation for last-drawn basic salaries of Rs 55,000, Rs 75,000, and Rs 95,000, using the formula specified under the Payment of Gratuity Act, 1972. Know your eligibility, formula, and the rules regarding rounding off service years. Whether you’re planning for early retirement or switching jobs, understanding your gratuity rights can help with better financial planning and employee benefit optimisation.
(Disclaimer: Don't consider this as an investment advice. Do your own due diligence or consult an expert for financial planning)
What is Gratuity and who is eligible?
Gratuity is a retirement, resignation or early retirement benefit paid to employees who've completed at least 5 years of continuous service. It’s governed by the Payment of Gratuity Act, 1972. Employees in organisations with 10 or more people are entitled to this payout.
When can you claim Gratuity?
You are eligible to receive gratuity under these conditions:
- After retirement
- On resignation post 5 years of service
- On superannuation
- In case of death or disability during service (no 5-year condition in such cases)
How are your service years counted?
Any service exceeding 6 months is rounded off to a full year. For instance, 9 years and 4 months will be treated as 9 years, while 9 years and 6 months will be rounded to 10 years.
Gratuity formula explained
Here’s the standard formula:
Gratuity = (Last Drawn Salary × Years of Service × 15) / 26
15 = 15 days’ wage
26 = Number of working days in a month excluding Sundays
Gratuity on Rs 55,000 salary after 9 years
For a basic salary of Rs 55,000 with 9 years and 4 months of service (rounded to 9 years):
Gratuity = (55,000 × 9 × 15) / 26 = Rs 2,85,576
Gratuity on Rs 75,000 salary after 9 years
For a basic salary of Rs 75,000 and 9 years of service:
Gratuity = (75,000 × 9 × 15) / 26 = Rs 3,89,423
Gratuity on Rs 95,000 salary after 9 years
With a last-drawn basic of Rs 95,000 and 9 years of service:
Gratuity = (95,000 × 9 × 15) / 26 = Rs 4,93,269
Can employers skip Gratuity payment?
No. If a company falls under the Gratuity Act, it’s legally bound to pay gratuity. Opting out is not allowed, making it a mandatory post-employment benefit.