Calculating gratuity is an important aspect of an employee’s financials and it is often one of the reasons why an employee is motivated to work for a particular employer. Gratuity is a lump sum amount that is paid by the employer to an employee at the end of his/her employment tenure. Gratuity is paid as a token of recognition for the services rendered by the employee.
If you are looking for a gratuity calculator to know how much gratuity you will receive from your employer, there are various online calculators available that are easy to use. The gratuity calculator is a useful tool that helps employees to calculate the amount of gratuity they will receive at the time of retirement or resignation.
To calculate gratuity, you need to know the rules and guidelines set by the Indian government. The Gratuity Act of 1972 regulates the payment of gratuity to employees who have served for more than five years in an organization. Gratuity is calculated on the basis of the employee’s last drawn salary and the number of years of service. The formula to calculate gratuity is:
Gratuity = (Last drawn salary x 15 x Number of years of service) / 26
In this formula, last drawn salary refers to the basic salary plus dearness allowance and the number of years of service should be rounded off to the nearest full year.
For example, if an employee has worked for 8 years with a last drawn salary of INR 50,000, the gratuity amount would be INR 1,15,385.
Gratuity Calculator Online
There are a number of gratuity calculators available online that can help you calculate your gratuity. The online calculator requires you to enter details such as your basic salary, the number of years of service, and the retirement age. Once you enter these details, the calculator will give you an estimate of the amount of gratuity you will receive at retirement.
EPF Calculator
Along with gratuity, the provident fund (PF) is another important aspect of an employee’s finances. The EPF calculator is another useful tool that helps employees to calculate their PF balance. The PF is a fund created by the employee and the employer, which is used to provide a financial cushion to the employee after retirement.
The EPF calculator requires you to enter details such as your basic salary, the contribution made by you and your employer, and the rate of interest. Once you enter these details, the calculator will give you an estimate of your PF balance at retirement.
Rules for Gratuity Payment
Gratuity payment is subject to certain rules and regulations as per the Indian government. The rules for gratuity payment include:
- The employee should have completed a minimum of 5 years of continuous service with the employer.
- Gratuity is payable only at the time of retirement, resignation, or death of an employee.
- If an employee dies while in service, gratuity is payable to the nominee/legal heir of the employee.
- Gratuity payment is calculated on the basis of the employee’s last drawn basic salary.
- In case an employee has worked for more than 6 months in a year, it is considered as a full year for the calculation of gratuity.
- The maximum gratuity amount that can be paid is INR 20 lakh.
- Gratuity payment can be made in cash or through a cheque or bank transfer.
- In case an employee is terminated for misconduct, he/she is not eligible for gratuity.
- Gratuity is exempt from tax up to a certain limit as per the Income Tax Act.
In conclusion, gratuity is an important aspect of an employee’s financials and it plays a huge role in motivating employees to work for a particular employer. The gratuity calculator is a useful tool that helps employees to calculate the amount of gratuity they will receive at the time of retirement or resignation. The PF calculator is another useful tool that helps employees to calculate their PF balance. The rules and regulations set by the Indian government should be followed while calculating gratuity and PF balance. It is important to gauge all the pros and cons of trading in the Indian financial market before making any investments.
Summary
Gratuity is a lump sum amount that is paid by an employer to an employee at the end of his/her employment tenure. The formula to calculate gratuity is (Last drawn salary x 15 x Number of years of service) / 26. To calculate gratuity, you can use the gratuity calculator available online. Provident Fund is another important aspect of an employee’s financials and can be calculated using the PF calculator. The rules for gratuity payment include minimum 5 years of continuous service, payable only at retirement/resignation/death, maximum cap of INR 20 lakhs, and payment in cash/cheque/bank transfer. Investors must gauge all the pros and cons of trading in the Indian financial market before making investments.
