Gratuity Calculation, Gratuity Formula, Rules & Eligibility – All You need to Know

A gratuity is an amount paid by an employer to his employee after completing five or more than five years of service. An employer can choose to pay with his profit or choose to invest in insurance schemes to save for his employee’s gratuity. In the case of insurance schemes, the employee too can make contributions. 

You can use the Gratuity Calculation Formula to calculate your gratuity. The gratuity is divided into two parts – employees who are covered and employees who are not covered. 

The formula for employees who are covered is (15 X monthly salary X working tenor) 26. The formula for employees who are not covered is (15 X monthly salary X working tenor) 30. 

You can invest your gratuity amount in several schemes like a Fixed Deposit (FD) to avail substantial returns via which you can secure your retirement life. 

To be eligible for gratuity, you should have served the same company for 5 years or more. Additionally, you are also eligible for gratuity if you are suffering from illness or disability due to an accident. In case of the demise of an employee, the gratuity amount will be paid to his legal heirs or appointed nominee. 

You can apply for your gratuity by applying in favor of your employer within 30 days from the payable gratuity date.  

How do financial institutions calculate compound interest quarterly on fixed deposits?

Fixed deposits in India are more popular investment schemes than life insurance, mutual funds, etc. The high Fixed Deposit Interest Rates in 2019 is one of the reasons behind their popularity compared the easy availability.

Another reason is the power of compounding, which enables investors to generate interest on interest. Financial institutions compound interest on a fixed deposit with the formula – A = P (1 + r/n) ^ 4t.

Here, the maturity amount is denoted by A, deposited amount by P, rate of interest by r, number of times the interest is compounded (12 for monthly, 4 for quarterly, 2 for half-yearly, and 12 for monthly) by n, and investment tenor by t.

Also, Read This: NRI FIXED DEPOSIT | BENEFITS OF NRI FD – BAJAJ FINANCE

Hence, an FD of Rs. 10,000 invested at a rate of interest of 8% for 5 years will return Rs. 14,589 as per the above formula, where n = 1.

However, the return will become Rs. 14,859 if the interest is compounded quarterly, where n = 4.

Non-cumulative FDs in India provide interest monthly, half-yearly, quarterly, or yearly. These FDs are beneficial for those seeking regular income.

Contrarily, cumulative FDs provide returns only after maturity. Generally, the rate of interest on these fixed deposits is higher than that on non-cumulative FDs.

 

Facts and figures to be aware of in Senior Citizen Scheme

To render safety and happiness in the lives of an individual after retirement, an extraordinary scheme abbreviated SCS was introduced by the government to help the senior class of the society.  

The Eligibility Criteria 

• To be an eligible candidate for the Senior Citizen Saving Scheme, you have to be somewhat 60 years or above, in age.
• If you are someone retired, from defense background, then the age limit is not a criterion, applicable on you. 
• If you meet the VRS rule and, retire somewhat within 60 years of age, then you are equally eligible as others in the list. 

The tenure of the investment 

• The normal tenor for the investment scheme is 5years, and the timeframe starts gets affected, the moment you invest in the policy plan.  
• On personal reasons & requirements, you can further increase the tenure by one more year. 
• The thing to remember while checking for PF Account balance is that this feature is possible once in every investment. 

The interest rate 

• As opposed, to any other form of investment, the SCS provides interest that is compounded annually and in some cases even quarterly. The rate of interest that an individual gets hold of is as high as 8.7%. 
• Unlike other forms of investment where the rates of interest keep on fluctuating, the SCS is specifically built, so that remains constant despite the influences of outside forces. 
• Avoid early withdrawals or claiming them before maturity, 1.5% of the total investment is deducted, on withdrawing the amount before 2years from the eve of completion. 
• A person who is eligible for the scheme is provided, with tax benefits and other forms of monitory relaxation are also awarded to such individuals. 

In this modern era, there is more than just one way to perform any activity. By visiting any public or private sector bank and filling out the application form, you can avail for the service.

Also, Read This: Senior Citizens Savings Scheme (SCSS): Here’s all you need to know

Know How To Fill Form 15G and 15H Online

Making investments in FDs is turning into a more profitable option since CBDT (Central Board of Direct Taxes) introduced alterations in the Form 15H and Form 15G under section 80TT of Income Tax Act of 1961. If you want to submit these forms, then first you need to know all about them. Form 15H is designed for senior citizens who wish to invest in FDs. Whereas anyone below the age of 60, can fill the Form 15G to acquire a tax waiver. Moreover, you need to know How To Fill Form 15G and 15H Online without any complex procedures. 

Ways To Submit Forms

You can submit these forms both online and offline, so it depends on your personal choice of how you wish to submit these forms. Here are the prime steps you should follow when submitting the form 15 g or 15H: 

Step 1: Log on to the main website

Step 2: Click on ‘E-Services’ on the top bar

Step 3: On the left section, click on ‘Form 15G/H’

Step 4: Choose your branch code where deposits are held

Step 5: On the next page, basic information will appear

Step 6: Enter the below-mentioned  information:

Name, PAN Card number, your status (HUF/Trust), your nationality, email ID, state, and address

Step 7: Submit to acquire a High-Security Password

Step 8: Confirm the same and a message of successful creation and submission of the Form will appear. Download the form from the same page. 

After you Know How To Fill Form 15G and 15H Online, you need to know when to submit these forms. You can submit both the forms in April as these forms are required to be submitted in every financial year. TDS is said to be retrieved on the total of interest constituted, paid and accrued by the end of the Financial Year i.e. 31st March on the FDs.

How to choose a good FD Scheme in 2019

When you have decided to invest in a Fixed Deposit scheme, selecting a good company or bank and a good scheme can be a hectic task. One needs to do a lot of groundwork while selecting a good scheme. It is very important to get a good FD scheme if you want to have good returns. One of the best FD schemes is provided by Bajaj Finance FD.

There are a lot of factors that one needs to see while selecting a well-fixed deposit scheme. Factors like the interest rate paid, the credibility of the bank or the company plays a major role while choosing a fixed deposit scheme.

• Rate of interest: one of the most important factors is the rate of interest. You must select the FD scheme which pays a higher rate of interest. The FD rates in 2019 are very high and therefore, it is a good time to invest in the FD schemes.
• Tenure: The tenure also determines the rate of return of your investment and therefore, you must select a tenure before investing in a good FD scheme. Longer the tenure, higher the interest rate will be.
• Interest Pay-out options: The scheme which has an option of interest pay-outs is a good scheme. Don’t invest in the schemes which don’t have the options of interest payouts. Bajaj Finance FD scheme provides you a good scheme in the interest payouts. 
•  The credibility of the bank/company: You must always invest in the FD scheme which is provided by a credible bank or the company. Never invest in some unheard companies or new banks because they might deceive you.
• Interest calculator: use an FD interest calculator and find out how your interest rate will be calculated as this will provide a lot of information about your FD scheme. 

Therefore, if you want to invest in a well-fixed deposit scheme, then you must focus on the above-stated points and select the best scheme for you.