How to Calculate Gratuity on Retirement? – With effect from 24.05.2010 maximum amount of gratuity payable is increased to `10 lakhs under Gratuity Act and there is no ceiling under SBOSR/BPS. Amount of gratuity payable is calculated as below:
Under Payment of Gratuity Act:
Gratuity Amount = Salary* x 15 x No. of years of service ÷ 26
Where ,
Salary = gross pay as on the date of last attending the duty minus HRA, CCA, Washing allowance, Conveyance Allowance. Out of FPP only increment component to be taken (Period of service beyond six months shall be rounded off to next higher year. EOL on LOP beyond 360 days and Unauthorised absence should not be taken into a/c for the purpose of service)
Read : How To Calculate Your Gratuity ?
Under SBOSR and Bipartite Settlement of Banks
(i) For service upto 15 years = Pay x Number of years of service
(ii) For service of above 15 years upto 30 years = Pay x 15
(iii) For service of above 30 years = (Pay x 15) + (Pay x No. of years of service beyond 30 ÷ 2)
Pay = Basic pay + stagnation increment + other allowances (ranking for PF only)
NOTE : For officers, last drawn pay as on the date of cessation to be taken into a/c. For service of six months and above, in the case of more than 30 years of service, gratuity shall be calculated on pro rata basis.
NOTE : For workmen, average of the Pay components for last 12 months immediately preceding the cessation of service shall be taken into a/c. Service of six months and above shall be rounded off to next higher year.
NOTE : Service of less than six months should not be taken into a/c in both the cases.
The higher of the two in (a) i.e. Gratuity as per Act or (b) i.e. Gratuity as per SBOSR / BPS or Bipartite Settlement will be paid.
Income Tax Rebate : Gratuity Paid up to `10.00 lakhs is exempt from income tax with effect from 24th May 2010.
