New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    While computing exemption in respect of gratuity

    received by a non-Government employee covered by the Payment of Gratuity Act, one of the items to be considered for computing the maximum amount of exemption is 15 days salary × years of service. In this case, 15 days salary is to be computed bydividing the monthly salary by _________ days. 
    A 30 Correct Answer Incorrect Answer
    B 26 Correct Answer Incorrect Answer
    C 31 Correct Answer Incorrect Answer
    D 24 Correct Answer Incorrect Answer

    Solution

    The formula for calculating gratuity for non-government employees covered by the Payment of Gratuity Act is: Gratuity = 15 * Last drawn salary * Number of years of service / 26 Where, Last drawn salary is the average salary of the employee for the last 12 months of service. Number of years of service is the total number of years of service with the employer. 26 is the number of days in a month.  Therefore, 15 days salary is to be computed by dividing the monthly salary by 26.

    Practice Next