For many people, gratuity is a confusing topic. How much should you leave? What if the service was terrible? Is it even necessary to leave a gratuity at all? In this blog post, we’ll explore the ins and outs of gratuity so that you can be a pro the next time you’re dining out or using services that require tipping. We’ll cover everything from when to leave a gratuity to how to calculate it. By the end of this post, you’ll be an expert on all things gratuity!
What is gratuity?
Gratuity is a sum of money given to an employee by a customer, in addition to the normal payment for services rendered. A gratuity can also be given to certain service providers, such as taxi drivers and waiters. The word “gratuity” comes from the Latin gratuitas, meaning “free gift”.
How is gratuity calculated?
There are a few different ways that gratuity can be calculated. The most common method is to simply multiply the cost of the bill by a certain percentage. For example, if your bill came to $100 and you wanted to leave a 15% gratuity, you would multiply 100 by .15 to get $15. Another common method is to first calculate what 10%, 15%, or 20% of the bill would be and then add that amount to the total cost of the bill.
For example, if your bill came to $100 and you wanted to leave a 15% gratuity, you would first calculate 10% of the bill ($10), then add that to the total cost of the bill ($100 + $10 = $110), and finally calculate 15% of that new total ($16.50).
What are the rules for gratuity in India
In India, gratuity is payable to an employee who has rendered continuous service for not less than 5 years. The amount of gratuity is calculated with reference to the last drawn salary of the employee and is capped at Rs. 20 lakhs.
The rules for gratuity in India are as follows:
1. An employee is eligible for gratuity if he/she has completed 5 years of continuous service with the employer.
2. The amount of gratuity is calculated with reference to the last drawn salary of the employee and is capped at Rs. 20 lakhs.
3. Gratuity is payable on termination of employment due to death, disability or retirement.
4. Gratuity is not payable in case of voluntary termination of employment by the employee.
How to calculate gratuity for yourself
If you’re like most people, you probably don’t know how to calculate gratuity for yourself. Here’s a quick and easy guide:
1. Determine the amount of your eligible earnings. This includes all regular pay, overtime pay, bonuses, commissions, and vacation pay earned during the year.
2. Multiply your eligible earnings by 5%. This is the maximum amount of gratuity that can be paid out.
3. Divide the gratuity amount by the number of days worked during the year to get your daily rate.
4. Multiply your daily rate by the number of days worked during the period for which you are calculating gratuity (usually 15 days). This is the amount of gratuity you should receive.
Also Read : Section 54 of the Income Tax Act