Gratuity Calculations: Gratuity is an important component for government employees as it forms a major chunk of monetary benefits. Employees following Old Pension Scheme (OPS), National Pension System (NPS) and Unified Pension Scheme (UPS) are eligible to get a gratuity amount upon completion of their service.
But how is gratuity calculated for them?
What is the minimum service years criterion?
Do they get different gratuity in different pension systems?
What will be the estimated gratuity for a government employee with Rs 1,00,000 as the last-drawn salary and 31 years of pensionable service?Â
Gratuity for government employees  Â
Gratuity is a lump sum amount that government employees get on completion of at least 5 years of service.
There is no minimum amount for gratuity.
However, the maximum amount allowed is Rs 25 lakh.
The gratuity for 33 years of service or more is 16.5 times the last-drawn basic pay and dearness allowance (DA), subject to a maximum of Rs 25 lakh.
Under Section 10(10), a gratuity amount up to Rs 20 lakh is exempt from tax.Â
Death gratuityÂ
If a government employee dies, their nominee or family member becomes eligible to get gratuity.
There is no stipulation in regard to any minimum length of service rendered by the deceased employee.
The rates for the death gratuity are regulated as follows:Â
| Qualifying Service | Rate |
| Less than one year | 2 times of basic pay |
| One year or more but less than 5 years | 6 times of basic pay |
| 5 years or more but less than 11 years | 12 times of basic pay |
| 11 years or more but less than 20 years | 20 times of basic pay |
| 20 years or more | Half of emoluments for every completed 6 monthly period of qualifying service subject to a maximum of 33 times of emoluments |
Service gratuity
Government employees with less than 10 years of service are not entitled to get a monthly pension, but they are entitled to get a service gratuity.
The admissible gratuity amount in that condition will be half a month’s last-drawn basic pay and DA for each completed 6-monthly period of qualifying service.Â
Gratuity calculation for government employees
Gratuity for government employees = (basic pay+DA) X service half years X 1/4
Gratuity for employee with Rs 1 lakh last-drawn basic pay, 31 years of service
We are calculating the pension at the current DA rate of 55 per cent. So, for an Rs 100,000 last-drawn basic pay, the DA will be Rs 55,000.
Estimated gratuity amount will be Rs 24,02,500.
