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Gratuity Calculator

₹500 ₹10,00,000
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Maturity Amount ₹ 0
Total Interest ₹ 0

Total Gratuity Payable ₹ 0

Maturity Amount

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Total Interest

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Total Gratuity Payable

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What is Gratuity?

Gratuity is a type of social security payment made by employers to employees at the time of retirement. It translates to an amount paid as a reward for services rendered. Gratuity payments to employees are aimed at rewarding them for their extended services rendered to the employing company during the service period. 

 

To be eligible for gratuity payments, employees should have completed at least 5 years of continuous service for an employer. However, in special circumstances where an employee is forced to leave employment before the completion of five years due to an illness, accidental disability or death, they (or their nominees) will be eligible for gratuity payments. 

 

What is a Gratuity Calculator? 

A gratuity calculator is a user-friendly online tool that helps employees and employers calculate the gratuity payment due. It simplifies the complex gratuity calculation process and requires only a few basic inputs like the employee’s salary and their service period. 

 

Furthermore, anyone can use a gratuity calculator online free of cost to check how different salary amounts and service periods affect the final payment. If you are an employee, this tool can be handy in your financial planning journey. 

Gratuity Calculation Formula 

The gratuity calculation formula depends on whether or not the employer is covered under the Payment of Gratuity Act, 1972. The formula for calculating gratuity in each case is as follows:

 

  • Employer Covered Under the Payment of Gratuity Act, 1972

Any employer with 10 or more employees is covered under this Act. In this case, this is the gratuity calculator formula used:

 

Gratuity = Last Drawn Salary x Tenure of Service x 15/26 

 

For instance, say your last drawn salary (i.e. basic pay plus dearness allowance) is Rs. 1,00,000 and you have been continuously employed with your current company for 10 years and 9 months. The tenure in this case will be rounded up to 11 years. The gratuity amount will be computed as follows. 

 

Gratuity:

= Last Drawn Salary x Tenure of Service x 15/26 

= Rs. 1,00,000 x 11 years x 15/26

= Rs. 6,34,615

 

  • Employer Not Covered Under the Payment of Gratuity Act, 1972

If an employer is not covered under the Act, the formula for gratuity calculation will be as follows:

 

Gratuity = Last Drawn Salary x Tenure of Service x 15/30

 

So, let us take the same example outlined above and apply it to an employer who is not covered by the Payment of Gratuity Act, 1972. The gratuity amount in this case will be computed as shown below.

 

Gratuity:

= Last Drawn Salary x Tenure of Service x 15/26 

= Rs. 1,00,000 x 11 years x 15/30

= Rs. 5,50,000

How Can a Gratuity Calculator Help You? 

A gratuity calculator is a useful tool for employees who want to estimate their end-of-service benefits. By submitting a few key details like the last drawn salary and the period of service, this online tool calculates the gratuity amount that an employee is entitled to receive. Knowing this makes financial planning easier because the gratuity calculator provides a clear idea of the lump sum an employee will receive at retirement or in the case of a job change. It can also be instrumental in helping an employee plan their career and long-term goals more effectively. 

 

How to Use the Bajaj Broking Gratuity Calculator?

The Bajaj Broking gratuity calculator is easy to use even for beginners. If you are an employee approaching retirement and want to know the gratuity payment you are eligible for, or if you are an employer who wants to calculate an employee’s gratuity eligibility, here is how you can use the gratuity retirement calculator. 

 

  • Step 1: Enter the monthly salary in rupees. This includes the basic pay and the dearness allowance. 

  • Step 2: Enter the years of service the employee has completed in their current employment. This should be 5 years or more. 

  • Step 3: Submit these details online. 

 

The Bajaj Broking gratuity calculator will then compute the total amount of gratuity payable. Depending on whether you are the employer or the employee, you can use the results to proceed with the next step. 

Advantages of Using a Gratuity Calculator

A gratuity calculator can be useful for salaried individuals in many ways. The benefits of a gratuity calculator include the following.

 

  • Gratuity Amount Estimates: With a gratuity calculator, you can get a precise estimate of the amount payable at the end of the service period. This is easier than manually calculating the amount. 

  • Transparency: By using a gratuity calculator, you can see exactly how your gratuity is calculated. This transparency helps you understand the process and ensures that all the components like the service period and the salary drawn are correctly accounted for.

  • Better Financial Planning: A gratuity calculator can project future gratuity amounts based on the expected service tenure and salary increments. This forward-looking use case helps you plan for long-term financial goals with greater confidence.

  • Scenario Analysis: Since this tool is available for free online, you can change the variables to account for salary increments or additional years of service. This helps you understand how different scenarios impact your gratuity amount.

What are the Eligibility Criteria for Payment of Gratuity?

The eligibility criteria for gratuity payments include the following: 

 

  • The employee should be eligible for superannuation benefits. 

  • They should have served a continuous employment period of at least five years. 

 

The 5-year limit does not apply to employees who may have resigned from full-time employment due to an illness or accidental disability. Additionally, if an employee dies in service before the completion of five years of employment, their nominee will be eligible for the gratuity benefits. 

Taxation Rules For Gratuity

The taxation of gratuity depends on the nature of employment. Check out the details below. 

 

  1. For Government Employees:

    The gratuity received is fully exempt from tax. 

  2. For Non-Government Employees Covered Under the Gratuity Act:

    The least of the following amounts is exempt from tax:

    • Actual gratuity amount received

    • Last Drawn Salary x Tenure of Service x 15/26

    • Rs. 20 lakhs 

  3. For Non-Government Employees not Covered Under the Gratuity Act:

    The least of the following amounts is exempt from tax:

    • Actual gratuity amount received

    • Last Drawn Salary x Tenure of Service x 15/30

    • Rs. 20 lakhs 

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Frequently Asked Questions

What components of the salary does a gratuity calculator use?

Answer Field

A gratuity calculator uses only two components to calculate the gratuity amount — the salary (i.e. basic pay plus dearness allowance) and the number of years of service.

Can I use a gratuity calculator to estimate the tax on gratuity payments?

Answer Field

No, the gratuity calculator is specifically used for estimating the amount of gratuity payable to an employee. It is not a tax calculator.

Is the gratuity calculator different for private-sector and public-sector employees?

Answer Field

No, this online tool can be used for the calculation of gratuity for private employees and government employees.

What is the minimum tenure required for gratuity payment?

Answer Field

An employee should have completed a minimum of 5 years of continuous service with an employer to be eligible for gratuity payments.

Is the gratuity amount deducted from an employee’s CTC?

Answer Field

No, the gratuity amount is considered a part of an employee’s cost-to-company (CTC). So, it is not deducted from the CTC.

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