Gratuity Calculator
Calculates the gratuity amount payable to employees upon leaving a job based on salary and tenure.
Total Gratuity Payable
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What is Gratuity?
Gratuity is a financial reward given by employers to employees in recognition of long-term service. It serves as a token of appreciation and is typically paid upon resignation, retirement, or in the unfortunate event of disability or death. Governed by the Payment of Gratuity Act, 1972, gratuity is a valuable benefit for employees who have completed a minimum tenure.
Who is Eligible to Receive Gratuity?
Employees who have rendered continuous service for at least 5 years with an employer are eligible to receive gratuity. Exceptions apply in cases of death or disability, where the minimum service requirement is waived. Eligibility extends to all employees, including those in the private and public sectors, covered under the Payment of Gratuity Act.
What is a Gratuity Calculator?
A gratuity calculator is an online tool designed to help you estimate the amount of gratuity you are entitled to base on factors such as your last drawn salary and years of service. With TaxSpanner's gratuity calculator, you can easily get an accurate estimate of your gratuity in just a few clicks.
Formula for Gratuity Calculation
The formula for calculating gratuity is pretty simple:
Gratuity = (Last Drawn Salary × 15 × Number of Years of Service) ÷ 26
Here, the last drawn salary includes your basic salary and dearness allowance (DA). The number of years of service is rounded off to the nearest full year.
How is Gratuity Calculated?
To compute your gratuity, you can use this formula:
- Enter your last drawn basic salary and dearness allowance.
- Multiply this amount by 15.
- Multiply the result by the number of completed years of service.
- Divide the total by 26.
Or use our TaxSpanner Gratuity Calculator to do the math for you automatically.
How to Use the TaxSpanner Gratuity Calculator
Using our gratuity calculator is simple and intuitive. Just follow these easy steps:
- Enter your last drawn salary (including basic and DA).
- Input the total number of years you’ve worked for the employer.
- Click “Calculate” to get your gratuity amount instantly.
Our tool will give you an accurate calculation, saving you time and eliminating the need for manual calculations.
Benefits of the TaxSpanner Gratuity Calculator
- Fast and Accurate: Get results instantly with our reliable calculator.
- User-Friendly: Easy-to-use interface, suitable for anyone.
- Comprehensive: Covers all essential inputs to provide precise calculations.
- Tax-Saving Guidance: Helps you plan gratuity investments for optimal tax benefits.
Gratuity Taxation Rules You Need to Know
Gratuity payments are subject to specific tax exemptions under Indian tax laws. For government employees, gratuity is fully exempt. For others, gratuity up to Rs. 20 lakhs is tax-exempt, and amounts beyond this limit are taxable according to your income bracket.
Smart Ways to Invest Your Gratuity Amount
Once you receive your gratuity, it's essential to invest it wisely. Here are some popular options:
- Fixed Deposits (FDs): A secure and low-risk investment option.
- Mutual Funds: Ideal for those seeking higher returns with moderate risk.
- National Pension Scheme (NPS): A tax-saving retirement-focused investment.
- Public Provident Fund (PPF): A safe, long-term investment with tax benefits.
Ready to calculate your gratuity? Try the TaxSpanner Gratuity Calculator now and make informed decisions about your post-retirement benefits.
