written by khatabook | June 30, 2021

Gratuity Calculator - Calculate Payable Gratuity Online

A gratuity is a financial benefit provided by the employer to an employee. The employer pays it as a token of appreciation when the employee leaves the company. Employees receive retirement income from gratuity payments. But, to be eligible for a gratuity, the employee must have served in that business for at least five years. A calculator for gratuity in salary helps in determining the amount of gratuity you will earn.  

What is Gratuity Salary Calculator India?

Gratuity calculator India is a tool that estimates the amount of gratuity you would get on retiring from your job. It is a useful tool for workers who want to retire from their employment. The gratuity calculation formula 2021 uses multiple inputs. It includes the last monthly salary received, the years of service including months, and the dearness allowance. 

The calculator returns the gratuity number in seconds and is simple to use. It is completely free and you can use it many times. Also, the calculator helps in long-term financial preparation for a stress-free retirement.

Eligibility for Gratuity

You meet the qualifying requirements for the gratuity if you fulfil the following requirements:

  • Superannuation age, that is, the previously determined age for retirement
  • Five years of service with the same company
  • No other full-time job

Advantages of Gratuity Salary Calculator India

To calculate the gratuity amount, you can use online gratuity calculators. The following are some of the advantages of using gratuity calculators:

  • It helps you in calculating the correct gratuity value.
  • The results are fast and the calculator is free to use.
  • Online gratuity calculators save time over manual calculations.
  • You can use the tool from any location at any time.
  • It helps in long-term financial planning. 

It is critical to invest it wisely rather than keeping the money in a savings account. Savings bank account returns do not outperform inflation. So, the returns are negative. To get better returns, you must invest your gratuity.

What is The Meaning of Gratuity in Salary?

Gratuity is a lump sum amount accrued to workers at the time of retirement. It is a token of appreciation after a minimum of 5 years of service. The law does not specify a set percentage for determining the real gratuity number. But, the employer determines the gratuity by two factors: 

  • The most recent monthly payment or basic pay received
  • The number of service years

Who Can Receive Gratuity?

An employee is entitled to a gratuity if they perform well at work and receive it in the following situations:

  • The age of retirement
  • Resignation or dismissal
  • Unemployment
  • On opting for a Voluntary Retirement Scheme
  • Either disability or death

Except in the case of injury or death, the employee must complete a period of 5 years of continuous employment in all the above cases.

Also Read: PF Calculator - Calculate EPF, Employee’s Provident Funds Online

What is The Gratuity Calculation Formula 2021?

The Gratuity Calculation Formula 2021 is G = N × B ×15/26. 

N is the number of completed years in the new organisation. B is the most recent wage or salary earned (plus dearness allowance, commission on sales, if any). 

You should note that the number of working days in a month is 26. Further, you should calculate gratuity at a rate of 15 days salary. 

Can an Employer Refuse to Pay Gratuity?

An employer can refuse to pay gratuity in the following situations: 

  • The employee's services have resulted in the destruction of the employer's property.
  • Violent behaviour of the employee.
  • The employee has committed an immoral activity.

Steps on How to Calculate Gratuity in Salary

You can calculate gratuity in simple steps using an online gratuity calculatorTo calculate what is the gratuity amount for you, follow the steps below.

  1. Step 1: First, enter your most recent basic salary received.

Enter the last month's basic salary you received. If your pay has changed, you must enter the new basic salary.

  1. Step 2: Next, enter the Dearness Allowance 

Enter the monthly DA amount received. If it does not apply to your case, leave it blank.

  1. Step 3: Enter the commission amount you received. The amount of commission earned depends on a fixed percentage of monthly turnover.
  2. Step 4: Enter your completed years of service, including part of a year. If the part of a year is 6 months or more, then round it off. Keep in mind you need work for at least 5 years.

It will now show you the amount of gratuity you will receive. Clear the details if you need to rework it.

For example, suppose Ram's starting date of employment was 20-Aug-2009 and his last working day was 21-Feb-2019. So the total period of service is 9 years and 6 months. In this situation, you can receive gratuity, calculated at 10 years.

Also Read: What Is Gross Salary - Know How To Calculate Gross Salary or CTC

Recent Gratuity Related Developments

The government increased the tax-free gratuity limit from Rs.10 lakh to Rs.20 lakh in 2018.  This move benefits the employees and reduces their taxable income. With more tax-free gratuity available employees, especially retirees can plan better for the future and invest accordingly. 

Conclusion

A gratuity calculator helps to estimate the gratuity that an employee receives when they leave the job after at least five years of service. Employers pay gratuity to their employees for the years of service provided to them. Gratuity payments provide employees with retirement benefits. Using a gratuity salary calculator helps you plan for post-retirement savings.  The Payment of Gratuity Act of 1972 controls the gratuity and its payment laws. Hope you enjoyed reading the above article! 

FAQs 

Is it necessary for employees to perform five years of continued service to receive a gratuity?

Yes, all employees must complete 5 years of continuous service to be eligible for a gratuity. However, in case of disability, illness, or death, employees don't need to complete five years of service for gratuity from the employer.

Is gratuity applicable to contract or temporary employees?

Contractual or temporary workers are eligible for gratuity if the company considers them to be employees.

What is the gratuity calculator formula 2021?

The gratuity formula is G = N × B × 15/26. N is the number of completed years with the current employer. B is the last wage/salary received (including DA, commission on sales, if any). Note: The number of working days in a month is 26. You calculate gratuity at a rate of 15 days salary. 

How long does it take to receive the gratuity in salary amount?

An employer must release the gratuity within 30 days of an employee's complete and final settlement date. In case of an error, the employer must pay interest on the balance gratuity from the due date until the final payment date.

What is the time taken into account for gratuity calculation?

From the day you started working with a company to the last working day, including your notice period.

Is it possible for me to receive gratuity if I resign?

According to the Gratuity Act, gratuity is only available after 5 years of operation. If you leave before 5 years of service, you will not be liable for such a gratuity.

Is it possible for contract workers to receive a gratuity?

Contractual workers can receive gratuity as well. It is the contractor's responsibility to pay employee gratuities. If the Contractor doesn't, the burden falls to the principal employer

What is the deadline for paying gratuity?

The employer must determine the gratuity and pay it within 30 days of the gratuity being payable.

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