Gratuity Calculator

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Gratuity Calculator

5 60

Total Gratuity Payable To You

Monthly Salary (Basic Pay + D.A) 10,000.00
No.of Years of Service 5
Total 28,846.15

Benefits of Using Keka’s Gratuity Calculator

Get to know your gratuity amount payable to you in seconds

Accurate Results

Shows you the exact gratuity amount you are eligible to receive employer in seconds and eliminates human error

Financial Planning

Once you know the Gratuity Amount you will receive, you can allocate your funds and make other investments

Transparency

Provides transparency in the calculations using standardised formulas and parameters, reducing potential disputes

Time-Saving

Get precise results quickly without spending hours manually determining the gratuity amount you will receive

Convenient Accessibility

The calculator can be used anywhere or from the comfort of your home to determine the gratuity amount

Data Security

Keka’s servers are safe to use keeping all essential details about employment history secure

Accurate Results

The Gratuity Calculator shows you the exact gratuity amount you are eligible to receive from your employer in seconds. It eliminates human error by using a propriety formula.

Data Security

Keka’s servers are safe to use keeping all essential details about employment history secure.

Financial Planning

Once you are aware of the Gratuity Amount you will receive, you can carefully allocate your funds and make other investments for maximum returns

Time-Saving

You get precise results immediately without spending hours manually determining the gratuity amount you will receive.

Convenient Accessibility

The Gratuity Calculator can be used anywhere or from the comfort of your home to determine the gratuity amount.

Transparency

Keka’s gratuity calculator provides transparency in the calculation process, as it typically uses standardized formulas and parameters, reducing any potential disputes

Formula to Calculate Gratuity

Before we get to the details of Gratuity Formula, it’s important to understand that employees are categorized under 2 categories based on their coverage under The Payment of Gratuity Act, 1972.

Advantages of Gratuity

Secure Retirement

Gratuity ensures a financial cushion for employees, providing a reliable source of income during retirement years.

Employee Loyalty

Offering gratuity helps in encouraging long-term commitment and dedication to the organization.

Legal Protection

Gratuity is legally mandated in many countries, protecting employees' rights and ensuring fair compensation.

Secure Retirement

Gratuity ensures a financial cushion for employees, providing a reliable source of income during retirement years.

Employee Loyalty

Offering gratuity helps in encouraging long-term commitment and dedication to the organization.

Legal Protection

Gratuity is legally mandated in many countries, protecting employees' rights and ensuring fair compensation.

Income Tax for Gratuity

According to the Income Tax Act of 1961, Gratuity received by an employee is considered a component of their pay and is subject to taxation. While filing Income tax returns, the taxable Gratuity Amount is considered as ‘Income from Salary’. The taxation on Gratuity depends on the type of Employee. This is briefly divided into 3 main categories:

1. Government Employees:

All Government Employees (central/state/local authority) are eligible to avail complete tax exemption on the Gratuity Amount. The Gratuity received is 100% Tax exempt.

2. Non-Government Employees Covered Under the Act:

Employees receiving Gratuity under The Payment of Gratuity Act, 1972, can avail tax exemption on the least of the following 3 amounts.
  • Actual Gratuity Amount received by the employee
  • Last drawn salary x tenure of service x 15/26
  • ₹20,00,000 Gratuity Amount (Maximum Limit notified by the Government)

3. Non-Government Employees Not Covered Under the Act:

Employees receiving Gratuity that is not under The Payment of Gratuity Act, 1972, can avail tax exemption on the least of the following 3 amounts.
  • Actual Gratuity Amount received by the employee
  • Half-month average salary x tenure of service
  • ₹20,00,000 Gratuity Amount (Maximum Limit notified by the Government)

Note: Any Gratuity Amount received that exceeds the above limit is taxable as per the Income Tax Slab. Example: If you have received a gratuity of ₹10,00,000. As per the gratuity calculation in the section above - How to Use Keka’s Gratuity Calculator, you are eligible for a gratuity amount of ₹4,03,846. The Maximum tax-free limit set by the Government is ₹20,00,000. From the 3 figures mentioned, the least amount is ₹4,03,846 which is exempt from tax. The remaining amount of ₹9,56,154 will be taxable as per the income tax slab.

Who is Eligible for Gratuity?

Once you know what Gratuity is, it’s important to know that Gratuity is not given to every employee. He/she must fit into the following Gratuity Eligibility criteria to receive the Gratuity amount.

Superannuation

The employee must be eligible for Superannuation (retirement benefit offered to the working class).

Resigned

The employee must have resigned from the job after continuous employment with the same organization for a minimum of 5 years.

Retired

The employee must be retired from the job (completion of career).

Frequently Asked Questions on Gratuity Calculator

What information do I need to use a gratuity calculator?

The formula to calculate gratuity would require 2 important employee information Gratuity(G) = N x B x 15/26 N – Number of years served in the organization B – Last drawn monthly salary including Dearness Allowance (if applicable)

Can I use a gratuity calculator for any country?

Gratuity Calculators are country specific as gratuity laws and regulations vary between countries. Every country has its formula and rules to calculate the gratuity amount. Hence, it is important to use a gratuity calculator that is designed for a specific country to ensure compliance with local laws and accurate gratuity calculations

Is there a free Gratuity Calculator available?

Keka’s Free Gratuity Calculator is designed to be the most easy-to-use and sophisticated tool. The calculator only requires the employee to enter the correct data to estimate the Gratuity Amount in seconds.

How accurate is a Gratuity Calculator?

Keka’s Gratuity Calculator eliminates human error by using a propriety formula. The Gratuity Calculator shows you the exact gratuity amount you are eligible to receive from your employer in seconds. It saves the time spent manually calculating the gratuity amount.

Can a Gratuity Calculator estimate gratuity for different salary levels?

The Gratuity Amount is calculated based on the basic monthly salary and dearness allowance (if applicable). It is 4.81% of the basic salary and the gratuity amount can be recalculated whenever by adjusting the input slider and re-entering the updated monthly salary.

Does a Gratuity Calculator consider the number of years of service?

Gratuity is payable only after an employee has completed 5 or more years of continuous service with the organization. However, the number of years must be rounded to full years. Example: If the employee has been working for 7 years, 3 months, the tenure of service will be considered as 7 years. But if the employee has been working for 7 years, 7 months, the tenure of service would be 8 years.

Can I calculate gratuity for multiple jobs using a Gratuity Calculator?

According to the Gratuity Act, an employee is eligible for gratuity after completing a minimum of 5 years in the organization. These 5 years must be continuous and there should not be any gap in the tenure of service with the organization. The Gratuity Calculator will then calculate based on the total number of years and last drawn salary from the organization.

Can a Gratuity Calculator account for bonus payments or incentives?

According to the Gratuity formula, the basic salary and dearness allowance (if applicable) are included in the last drawn salary. The Gratuity calculator will not account for any other bonus payments or incentives. Included is - Dearness allowance which is a cost-of-living adjustment that is paid to employees by the Government.

Does a Gratuity Calculator provide a breakdown of the gratuity calculation?

The Gratuity calculator only shows the gratuity figure in seconds based on the last drawn salary and tenure of service.

Can a Gratuity Calculator help me plan for retirement?

By knowing the gratuity amount via a gratuity calculator, employees can build a financial strategy. With appropriate investments, and allocating funds, one can enjoy retirement without worrying about finances.

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