Gratuity Calculator

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Gratuity Amount

28,846

Avoid tax losses

What Is Gratuity?

The sum of money that a corporation pays its employee at the end of their service is referred to as gratuity. The gratuity sum, however, is only granted to employees who have worked for the business for five years or longer. The 1972 Payment of Gratuity Act controls it.

If an employee becomes handicapped in an accident or due to a disease, they are eligible to receive their gratuity before the five-year mark. The amount of your gratuity is primarily based on your most recent income and the number of years you have worked for the company.

Checkout The Eligibility Criteria for Payment of Gratuity

You must fulfill the below listed requirements for gratuity eligibility in india:

  • Superannuation should be offered to you.

  • You ought to have completed your career by now (retired).

  • 5 years of continuous employment with the organisation should have prompted your resignation.

  • If your death occurs, your gratuity will be given to your nominee or, if you become disabled due to illness or an accident, to you.

What is a Gratuity Calculator?

When you leave a company as an employee, whether through retirement or another reason, you are paid a gratuity. Every employee is not given a gratuity. Some guidelines for paying the gratuity sum are outlined in the Payment of Gratuity Act, 1972. Only after working for an organisation for five years or more are you entitled for gratuities.

According to the regulations regarding gratuities, if an employee is hurt and becomes incapacitated as a result of an accident or disease, they may get a gratuity payment before completing five years of employment. The amount of gratuity you are entitled to depends on your final salary and the total number of years you worked for that organisation.
So let's say you intend to quit your job or are eager for retirement. In that situation, you can estimate how much you'll get in tip by using the onlinegratuity calculator. Based on the formula for calculating the gratuity, the gratuity amount would be determined using the gratuity calculator online.

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

Gratuity Amount Calculation – What is the Formula for Calculating the Gratuity?

The gratuity amount is calculated using a variety of factors. This sum is also based on how long a person has worked for the organisation and the latest salary received.
Lets do:

N = the number of years served in the company
B = the basic last drawn salary + DA
Then, Gratuity = N x B x 15/26

Eg 1: For Employees covered under the Act:

No. of years an employee works in an organisation = 15 years
His last drawn basic + dearness allowance = ₹30,000
Therefor Gratuity = 15 x 30,000 x 15/26 = ₹2,59,615.38

Eg 2: For Employees not covered under the Gratuity Act:

The employees would still receive the gratuity amount even if the organisation was not covered by the Gratuity Act. However, the days will be increased from 26 to 30.

The Gratuity amount calculation formula is:

Gratuity = (15 × last drawn salary × working tenure)/30

If you have worked for a company for seven years, the organisation is not covered under the Gratuity Act. And your basic salary was ₹35,000.

Gratuity Amount = (15 × 35,000 × 7) / 30 = 1,22,500.

How to Use the VakilSearch Gratuity Calculator?

Utilizing the Vakilsearch Gratuity Calculator online, complete the following steps to determine your gratuity:

  • By using a slider, you must input the base pay and, if necessary, the dearness allowance

  • The number of years spent working for the company is then entered

  • The online gratuity calculator would quickly determine the total amount of gratuity due to you

  • By adjusting the input sliders, you can recalculate the gratuity whenever you like

  • Moving the sliders will immediately calculate the gratuity.

Benefits of Using the Vakilsearch Gratuity Calculator Online

  • A simple to use general tool, the VakilSearch Gratuity Calculator asks for the basic income and the number of years of employment

  • After 5 or more years of continuous service, it gives you an estimate of the gratuity you might get

  • The gratuity calculator provides you with the figures in a matter of seconds

  • It aids in your financial planning by ensuring that the gratuity is invested wisely for the greatest possible returns

  • To determine the gratuity amount, you could use a gratuity calculator virtually anywhere, also at home.

What are the Taxation Rules for Gratuity?

The category of employee that must receive the tip will determine how the gratuity amount is taxed.

Any gratuity that a government employee (whether they work for the federal, state, or municipal government) receives is exempt from income tax.

Every additional qualified non-public worker whose employer is protected by the payment of Gratuity Act. In this case, the lowest of the 3 amounts will not be subject to income tax:

  • The actual amount of gratuity received

  • ₹20 lakh

  • The eligible gratuity.

Eg: You received a gratuity of ₹12 lakh from your company.

According to the preceding example's gratuity calculation, you are qualified for a gratuity sum of ₹2,59,615 as a result. The maximum amount exempt from taxes has been established by the government at ₹20 lakh. The least expensive of the three amounts, ₹2,59,615, is tax-free. The remaining sum of ₹9,40,385 is subject to taxation according to your income tax bracket.

***Please be aware that the maximum tax-free gratuity sum you may receive in your entire working career cannot exceed ₹20 lakh.

  • Usually, the business gets group insurance or deducts the gratuity from its budget

  • Contrary to the employee provident fund, which also includes the employee's contribution, the employer pays the gratuity sum

  • According to the Payment of Gratuity Act, 1972, a predetermined percentage of the wage is calculated and deposited in a gratuity account that would be due later

  • The perk serves as a superannuation benefit for departing employees.

  • All companies with more than ten employees are covered by the Act

  • A gratuity payment is made in the event of a resignation, retirement/superannuation, layoff or voluntary retirement, death, reduction, disability, or termination

  • In the event of death, the money will be paid to the employee's nominee.

FAQs on VakilSearch Gratuity Calculator