how to calculate gratuity for bank employees

 To calculate the gratuity for a bank employee, you can use the formula:

https://stableinvestor.com/wp-content/uploads/2023/06/Gratuity-Calculator-in-Excel.xlsx

$Gratuity=(Lastdrawnsalary\times 15/26)\times Numberofyearsofservice$

 

Explanation

• Last drawn salary: This is the employee's basic salary plus dearness allowance (DA) 
• 15/26: This is the gratuity payable, which is 15 days' wages per year 
• Number of years of service: This is the total number of years the employee has worked for the bank 

Example 

If an employee's last drawn salary is Rs. 40,000 and they have worked for the bank for 15 years, then their gratuity would be Rs. 3,46,153.
This is calculated as: 

$15\times 40,000\times 15/26=3,46,153$




Any excesses would be treated as ex-gratia. If the number of years you have worked in the last year of employment is more than six months, then it will be rounded to the nearest figure. Suppose your tenure of service is 16 years 7 months, then you receive the gratuity for 17 years.


To qualify for gratuity, an employee must have completed a minimum of five years of continuous service with the company. The computation of gratuity aligns with the formula prescribed by the Payment of Gratuity Act,


according to the Payment of Gratuity Act, a bank employee cannot receive more than Rs 20 lakh as gratuity, as this is the maximum limit set by law for tax-exempt gratuity for all employees in India, including bank employees; any amount exceeding this is considered taxable ex-gratia payment.