Online Gratuity Calculator
what is Gratuity calculator
A gratuity calculator is an online tool that helps you estimate the lump sum amount payable to an employee at the time of retirement, resignation, or termination, as long as the employee works for the company for a minimum period of 5 years continuously. Governed by the Payment of Gratuity Act, 1972, gratuity is a form of financial reward for long-term service.
Using a gratuity calculator online helps both employers and employees determine the amount payable or receivable without manually applying complex formulas.
How Does the Gratuity Calculator Work?
To calculate gratuity amount, the tool typically requires the following inputs:
Last drawn basic salary + dearness allowance
Number of years of continuous service
It then applies the formula:
Gratuity = (15 × Last Drawn Salary × Years of Service) / 26
This formula applies to employees covered under the Gratuity Act and assumes salary is paid monthly. The gratuity amount calculator online instantly displays the estimated payout, saving time and ensuring accuracy.
This tool is especially useful for retirement planning, HR operations, and employee exit processes.
Frequently Asked Questions:
Employees who have completed at least 5 years of continuous service in the same company are eligible.
Only basic salary and dearness allowance are considered.
Only in cases of death or disability; otherwise, 5 years is mandatory.
Gratuity is tax-free up to ₹20 lakh for employees covered under the Act.
Does the calculator apply to private sector employees?
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