What is Gratuity?

Any worker of a private company that supplies EPF provisions is appropriate to sustain an amount as recompense after completing 5 years of assistance. Although, an employee is also permitted to get the gratuity before five years if they get harmed and disabled in any kind of accident or due to any disorder. The Gratuity Calculator would calculate the recompense amount based on the formula for calculating the exact gratuity.

We furnish you with a free gratuity calculator which you can make use of and calculate how much your organization is in debt. All gratuity installments are managed by the laws that lie down below the Payment of Gratuity Act 1972. The amount turns on the last pinched salary and the years of services presented to the company.

Gratuity mentions the amount that an employer pay to his worker, in come back for services provided by him to the company. The worker can get the recompense before 5 years if he/she gets paraplegic in an accident due to any disease. Gratuity basically depends on your last drawn salary and the years of services which are provided to the Company.

Gratuity Calculation Formula

The number of gratuity workers whose employer is counterbalanced under the Gratuity Act can be calculated by utilizing the formula:

Gratuity = n*b*15 / 26

Where n = Tenancy of services completed in the company

b = Last drawn primary salary + perquisite allowance

For instance, you have worked with the ABC company for a session of 15 years. Your last drawn primary salary along with dearness allowance was Rs.30,000. Consequently:

The accumulated of gratuity = 15 * 30,000 * 15 / 26 = Rs.2,59,615

Two important points must be noted here:

As per the Gratuity Act, the aggregate of gratuity cannot be more than Rs.20 lakh. Any surfeit would be treated as non-refundable.

If the number of years you have worked in the last year of employment is more than six months, then it will circumnavigate to the nearest figure. Assume your tenancy of service is 16 years 7 months, then you sustain the gratuity for 17 years. Or else, it’s for 16 years if it happens to be 16 years 4 months.

For employees whose employer is not covered below the Gratuity Act, the gratuity amount intends to be calculated as per the half-month salary on each completed year of services.

The formula is: (15 * Your last pinched salary * the working tenancy) / 30.

For instance, you have a primary salary of Rs.30,000. You have provided continuous service of 7 years and the employer is not covered below the Gratuity Act.

Gratuity Total Amount = (15 * 30,000 * 7) / 30 = Rs.1,05,000.

Note that under the subsisting laws –

  • Your gratuity cannot outreach Rs.10 Lakh in its aggregate. Any amount beyond this upper limit is known as ex gratia payment.
  • Also, if you have worked for, say 17 years and 6 months, the statistic will be rounded off to the imminent single digit or 18 years.

What is a Gratuity Calculator?

The Gratuity Calculator would calculate the recompense amount based on the formula for calculating the exact gratuity.

Gratuity Formula:

(15 * your last drawn salary * tenancy of working) / 26.

A gratuity calculator is a tool that provides you an estimation of the amount that you would receive ahead, of evacuating the job, after supplying a continuous 5 years of services. It is a convenient tool to calculate the gratuity on seclusion from the company.

You must enter the inputs of the last pinched salary and the tenancy of continuous services with the company. The last pinched salary comprises your primary salary, the dearness allotment, and the commission that you have sustained from sales.

The gratuity calculator would show you the gratuity figures in seconds. It is very uninvolved to use and can be utilized at any number of times.

How can a Gratuity Calculator Assist You?

Below the Payment of Gratuity Act of 1972, you are appropriate to sustain the gratuity amount offered 

  • You are near the age of seclusion.
  • If you have completed 5 years of work in the same organization consistently.
  • Don’t have any other full-time proprietor.

In such kind cases, a gratuity calculator online in India is very helpful because 

  • It helps you discover the accurate amount awaited to you.
  • It saves your precious time and other resources.
  • You can use it from the consolation of your home.

It assists you in long-term financial plannings.

Advantages of Using Gratuity Calculator

As a market commander in financial events, we furnish you with the most enlightened tools in the market. Here are the causes why our Gratuity Calculator is useful for you.

  • Data security is of supreme importance. Our servers are assured and safe for use.
  • Our calculator is very easy to utilize and you won’t require any technical proficiency.
  • The Gratuity calculator is never wrong. You can trust the product.
  • The Gratuity Calculator is an easy-to-use all-inclusive tool, where you enter the primary salary and the years of services. It gives you an approximate of the gratuity you would sustain, after five or more years of continuous service.
  • The gratuity calculator reveals the gratuity figures in seconds. It assists you to plan your finances by infusing the gratuity in a very smart aspect, for a maximum comeback.
  • You can utilize the gratuity calculator from the commiseration of your home or practically anywhere to get the gratuity amount.

Taxation Rules and Regulations for Gratuity

The taxes pertinent to the gratuity amount depends upon the kind of employee:

The gratuity amount received by any government worker is exempted from the income tax.

For private-sector employees, the minimal of the following three amounts will be spared from income tax provided that the employer is covered under the Payment of Gratuity Act,

  • Rs.20 lakh.
  • The confirmed gratuity amount was sustained.
  • The appropriate gratuity.

The uttermost tax-exempt gratuity amount a worker can claim in his/her whole professional life cannot go yonder Rs.20 lakh.

Frequently Asked Questions:

How many times can I operate the calculator?

We have not placed any vaulting on the number of times you can operate the service. You can use it as many times as you required.

Assume, you have worked for 16 years and 4 months. How many years’ worth of Gratuity will you sustain?

The laws are formulated to round off the total employment session to the nearest full year. In your case, recompense will be calculated for 16 years. It might be 17 years if you had performed for 2 more months.

How much time does the employer take to announce the gratuity total amount?

An employee who is appropriate to get the gratuity amount can capitulate an application within 30 days of the date on which it becomes payable. Although, the claim for a gratuity will not be ailing, just because the applicant did not file the application within the specified time.

The employer would have to identify the gratuity amount, within 15 days from the date they sustain the application. The gratuity amount should be paid within 30 days of the employer sustaining the application form. If the employer mishears the time limit, they should pay the recompense amount and simple interest which is sustained on it.

If I resigned from my job after working for 3.5 years. Would it be appropriate to sustain gratuity?

No, you must complete at least a minimum of five years of continual service to be appropriate for gratuity. Although, the gratuity would be paid before 5 years of services, on death or disablement because of a disease or any kind of accident.

Is there any superior limitation on the amount of gratuity that you will sustain?

Yes, the amount of gratuity paid by a company cannot outreach Rs.20 lakh, disregarding the total number of years of service.

Will, I mislay the gratuity aggregate if my employer goes bankrupt?

The gratuity amount would be payable even if your employer goes bankrupt. No court order can put a stay on the recompense amount.

Also Read,

Before you invest in a multi-asset allocation fund: Things to Know
Senior Citizen Savings Scheme (SCSS)