Gratuity Calculator

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Gratuity Calculator – Calculate Your Employee Gratuity Amount

Gratuity is a financial benefit provided to employees by their employer as a token of appreciation for long-term service. It is governed by the Payment of Gratuity Act, 1972, in India and is payable when an employee leaves the job after completing a minimum of five years of continuous service.

Use our Gratuity Calculator to determine how much gratuity you are entitled to based on your salary and years of service.

What is Gratuity?

Gratuity is a lump sum amount paid by the employer to an employee as a reward for long-term service. It is a retirement benefit that ensures financial stability for employees after they leave a job. The amount of gratuity depends on the employee's last drawn salary and years of service.

How to Calculate Gratuity?

The gratuity amount is calculated using a standard formula:

Gratuity = (Last Drawn Salary × 15 × Number of Years Worked) / 26

Where:

  • Last Drawn Salary: Basic salary + Dearness Allowance (DA)
  • 15: Number of days considered for gratuity per year
  • 26: Total working days in a month

Example of Gratuity Calculation

Suppose an employee has worked in a company for 10 years, with a last drawn salary of ₹50,000.

Using the formula:

Gratuity = (50,000 × 15 × 10) / 26

Gratuity = ₹2,88,461

This means the employee is eligible to receive ₹2,88,461 as gratuity.

Who is Eligible for Gratuity?

An employee is eligible for gratuity if they meet the following criteria:

  • Has completed at least five years of continuous service.
  • Leaves the job due to resignation, retirement, or termination.
  • In case of death or disability, gratuity is paid to the nominee even if five years of service are not completed.

Taxation on Gratuity

The tax treatment of gratuity depends on the type of employer:

  • Government Employees: Gratuity is fully tax-free.
  • Private Sector Employees: Gratuity is tax-free up to ₹20 lakh in a lifetime.

Benefits of Using a Gratuity Calculator

  • Accurate Calculation: Get the exact amount of gratuity you will receive.
  • Financial Planning: Helps employees plan for retirement.
  • Time-Saving: No need for manual calculations.
  • Tax Estimation: Helps understand tax implications on gratuity.

Frequently Asked Questions (FAQs)

If you leave before completing five years of service, you are not eligible for gratuity. However, in the case of death or disability, the five-year requirement is waived.

Gratuity is mandatory for organizations with 10 or more employees under the Payment of Gratuity Act, 1972.

Gratuity is usually paid as a lump sum amount to the employee or nominee after retirement, resignation, or in case of death.

No, unless the employee is terminated due to misconduct. The Payment of Gratuity Act ensures gratuity payment in eligible cases.

Conclusion

Understanding your gratuity benefits helps in better financial planning. Our Gratuity Calculator provides an easy way to estimate the amount you will receive upon leaving a job. Plan ahead for a secure future.

Use our Gratuity Calculator today to know your entitlements and secure your financial future.