25/05/2017
The Cabinet Secretary has fixed date of 1st June 2017 for the perusal of the report of the Allowances Committee by the Empowered Committee
Fixing Very Good as Benchmark for granting MACP is not acceptable - Shiva Gopal Mishra
Click here to read
*************************************************************************
Automatic restoration of Commuted Portion of Pension and payment of Additional Quantum of Pension/Family Pension
How Gratuity is Calculated?
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula:
Last drawn salary (basic salary plus dearness allowance) X No of completed years of service X 15/26.
According to this formula, the time period of over six months or more is considered as one year.
This means if you have completed five years and seven months of service, the number of years would be considered as six years for calculation of gratuity benefit.
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.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, entire amount of gratuity received on retirement or death is currently exempted from income tax.
In case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.
