Gratuity Calculations for Government Employees: Gratuity is a reward from the employer to their employee for long years of allegiance. Since government employees work for many years or for decades in the majority of cases, they may get quite a substantial gratuity amount on their retirement. The gratuity amount depends on the last-drawn basic pay at retirement, the dearness allowance (DA), and the years of service. How much gratuity may you get if your last-drawn basic pay is Rs 92,000 and the number of service years is 30? See our calculations to know-
Gratuity for government employees
Government employees become eligible for gratuity on completion of at least 5 years of service. They get this amount in the form of a lump sum at retirement. Gratuity is of 3 types.
- Retirement gratuity
- Death gratuity
- Service gratuity
Retirement gratuity
Government employees get it at retirement on completion of 5 years of qualifying service.
Death gratuity
There is no minimum service length required for death gratuity. The deceased’s family member or a nominee gets it. The maximum death gratuity amount can be Rs 20 lakh. The amount depends on qualifying service years. The conditions are as follows:
Service gratuity
A government employee with less than 10 years of qualifying service is not entitled to a pension, but they get a service gratuity in such a case.
Service gratuity is given over and above the retirement gratuity at retirement.
The admissible gratuity amount is half a month’s last-drawn basic pay plus DA for each completed 6 monthly period of qualifying service.
How is retirement gratuity calculated?
Retirement gratuity is calculated at 1/4th of a month’s basic pay plus DA drawn on the date of retirement for each completed six monthly period of qualifying service.
The retirement gratuity payable for qualifying service of 33 years or more is 16½ times the basic pay plus DA, up to a limit of Rs 25 lakh.
Gratuity= (BP+DA) X service half years X 1/4
Gratuity for employee with Rs 92,000 as last-drawn basic pay, 30 years of service
We are calculating gratuity at the current DA rate of 55 per cent.
Last-drawn basic pay = Rs 92,000
DA at 55% of basic pay = Rs 50,600
Total salary eligible for gratuity calculation = Rs 1,42,600
Half service years = 30X2 = 60
Gratuity amount (estimated) = Rs 21,39,000
(Disclaimer: These are projections. Actual calculations may vary slightly.)