Gratuity Calculator | Gratuity Calculator Formula | Gratuity Calculator India
Gratuity calculator - calculating the amount paid to an employee by an employer, in return for the concerned services provided by the employee.
Let’s understand it from the basics: the meaning of gratuity, rather than directly understanding what a gratuity calculator is.
The Payment of Gratuity Act, 1972 governs the act and provisions with respect to gratuity.
Gratuity is basically the amount an employer pays to the employee for availing the services provided by the employee to the company. However, not every employee can receive the gratuity fund, but only those who have been working in the company for the least duration of 5 years or more.
In contrast, an employee can receive gratuity funds earlier, if they have been disabled due to an accident or a disease. Conversely, if that’s not the case, then your gratuity will be calculated on the basis of the last drawn salary and years of services provided by the employee.
For a better understanding of the gratuity calculator, let’s understand the eligibility criteria for gratuity payment.
What Are the Eligibility Criteria For Gratuity Payment?
Let’s check who is the eligible for gratuity payments -
- An employee must be eligible for superannuation.
- An employee must be retired from the service.
- An individual must have served the company for at least five years.
- In case of the death of the concerned individual, the gratuity fund will be paid to the nominee.
- The nominee will receive the gratuity payment in case of disablement due to an accident or sickness.
With the understanding of gratuity payment, we will discuss gratuity taxation rules.
What Are the Gratuity Taxation Rules?
The treatment of tax of a gratuity amount differs in accordance to the types of who have received the gratuity payment -
- In case a government employee will receive gratuity, he/ she will be exempted from payment of income tax.
- In case an employee belongs to a private sector, at least three amounts will be exempted -
- Payment of Rs 20 lakh.
- Eligibility to receive gratuity.
- The actual amount of gratuity to be received.
Since it is clear what gratuity is, let’s understand what a gratuity calculator is.
What is a Gratuity Calculator? | Gratuity Calculator India
A gratuity calculator India is simply a means to calculate the gratuity amount as per the established formula, that will be paid to an employee after resigning or retirement.
If you are looking for a gratuity calculator formula, then you can refer to it in the next section -
Gratuity Calculator Formula
15* last drawn salary* tenure/ duration of working / 26
A gratuity calculator is a tool that will provide you with an estimated amount, which an employee is entitled to receive after resigning, retiring, or rendering a continuous five years of service to the company.
Moreover, during applying the gratuity calculator formula, you are required to add information on the last drawn salary, which will include basic salary, dearness allowance, and commission from sales, including duration of service.
The gratuity calculator formula is seamless to apply, that can be seamless to understand through given examples. For instance, if the salary of an employee who has served in an organization for the duration of 5 years, has resigned with the last drawn salary of Rs 50,000, then the gratuity amount to be received by you will be 1,44,231.
Let’s understand how to calculate the gratuity amount through more examples.
Gratuity Calculator: Gratuity Calculator Formula | How to Calculate Gratuity For Private Sector Employees
Earlier we mentioned a gratuity calculator formula, now we will learn about one more gratuity calculator formula and how to calculate gratuity for private-sector employees.
Gratuity calculator formula 1
n*b*15 / 26
Here “n” will be the duration of time services are provided to a company.
“B” will be the last drawn basic salary in addition to the dearness allowance.
Now, let’s understand it through an example, say, an employee has worked with an ABC company for the duration of 15 years. While the last drawn salary, which is a basic salary and dearness allowance is Rs 30,000.
Then the gratuity amount payable to an employee will be Rs 2,59,615 as calculated using the gratuity calculator formula, i.e., 15 * 30,000 * 15 / 26.
To be noted -
- In accordance with the Gratuity Act, the amount of gratuity can not be more than Rs 20 lakh, thus if your gratuity amount exceeds this mentioned value, then the exceeded amount will be treated as e-gratia.
- For instance, if you have worked in a company for the duration of 15 years and 7 months, then this duration will be rounded off to 16 years. However, if the duration is 15 years and 4 months, then it will be rounded off to 15 years.
Gratuity calculator formula 2
This Gratuity calculator formula is applicable to employees whose employer is not covered by the Gratuity Act, if that’s the situation, then the gratuity amount will be calculated depending on the half month of the salary on each completion of the duration of service. The Gratuity calculator formula is -
15* last drawn salary* tenure/ duration of working / 26
Suppose, the salary of the concerned employee is 50,000 while the duration of which he/she has provided the service is 8 years, the gratuity payment received by the employee would be 2,30,769 as per (15 * 50,000 * 8) / 30.
Conclusion
Understanding all aspects of the gratuity calculator, including who is eligible to receive it and who is not, is not quite complex. However, rather than simply referring to it as a payment, we would refer to it as an award for serving a company for such a long duration, considering that it is only payable to those employees who have worked with a company for the duration of at least 5 years or more.
Although our major services are related to the compliance industry only, such as BIS certification, AERB approval, BEE certification, LMPC certification, EPR authorization, and other corporate compliance-related registration such as private limited company, public limited company, and other Indian and Global compliance.
So, if you are looking for an expert to take care of your tax, audits, and other compliance-related concerns - we are a one-stop solution to your compliance requirements.
