what's the procedure for graduaty calculation?

Answer 1

I think its Gratuity
Gratuity may be 3 types

1.In the case of Govt employees (central ,State and employees of Legislative assembly )------ Any death *** retirement gratuity received by Govt employees id exempted U/S 10(10) (i)

2. In the case of employees covered by the payment of Gratuity Act ,1972
Any gratuity received by an employee covered by the payment of Gratuity Act, 1972 is exempt from tax u/s 10(10)(ii) to the extent of the least of the following

a. 15 day's salary** (7 days salary in the case of employees of seasonal establishment) based on SALARY* last drawn for every COMPLETED year of service or part there of in excess of 6 months

b.maximum exemption Rs 350000/-
c. Actual Gratuity received.

*SALARY = Last drawn basic salary + DA whether terms of payments so provide or not so provide

**15 days salary =salary last drawn / 26 days * 15 days

# In the case of a piece rated employee, daily wages (other than overtime wages) shall be computed on the average of total wages received by him for a period of 3 months ending on the date of retirement.

3. In the case of any other employees

Any gratuity received by any other employee on retirement, death,termination,resignation is exempt from tax u/s 10 (10)(iii) to the extent of the following

a.1/2 {Half} month's AVERAGE salary*# for each completed year of service

b. Maximum exemption Rs 350000/-

c. Actual Gratuity received

*Salary = Basic +DA (if terms of employment so provide) + Fixed percentage of commission on turnover achieved by the employee.

# Average salary = Salary for the 10 months immediately preceding the MONTH in which the employee has retired
Divided by 10

** Where gratuities are received by an employee from more than one employer in the same Previous year , the aggregate maximum amount of gratuity exempt from tax can't exceed Rs 350000/-
*** Where an employee has received gratuity in any earlier year from his former employer and also receives gratuity from another employer in a later year, the maximum exemption limit of Rs 350000/- shall be reduced by the amount of exemption already claimed in any earlier u/s 10(10)(iii)

Gratuity received during the period of service is always Taxable.

Answer 2

You are perhaps referring to gratuity calculation.

Gratuity is calculated at the rate of half a month's salary for every year of completed service in an organization. To earn a gratuity, you have to at least render service for a minimum period of five years.

Under the Payment of Gratuity Act, in India, the fraction 15/26 is applied for every year of service. In other words, a month is considered as having 26 days.

Salary shall generally mean pay and dearness allowance. Maximum gratuity payable shall be Rs. 3,00,000.