Gratuity Calculator

Our gratuity calculator helps employers and employees in calculating the gratuity amount. Before understanding gratuity calculation, let's understand gratuity and gratuity rules.

What is Gratuity?

Gratuity is the lump sum amount that an employer pays to his employee when an employee leaves the company. Normally an employee has to complete 5 years of service agreement to get the benefit of gratuity.
But it all depends on the employer. An employer can give gratuity as a financial gift even if a person takes an early exit from the company before completing the service agreement.

Gratuity Rules

Below are the gratuity rules that the employee needs to take care of :

1. Gratuity comes under the Payment of Gratuity Act , 1972.

2. After completing 5 years of service agreement an employee is eligible for gratuity.

3. It's mandatory for an employee to have one nominee from the family because if the person dies then the gratuity will be rewarded to his family.

4. If a company has 10 or more than 10 employees then the company has to pay the gratuity.

Gratuity Formula

The formula for calculating gratuity is :

n : Number of years of service.
b : Last drawn basic salary + dearness allowance.

Gratuity Example : Lets say Arohini earns 1,00,000 per month which is a total of both basic pay and dearness allowance. And she has worked for 13 years in the company.

Here n = 13 , b = Rs. 1,00,000

Therefore the gratuity amount = 13 * Rs.1,00,000 * 15/26
Hence gratuity amount = Rs.750000

How to calculate gratuity online ?

Gratuity amount calculation is done with the help of a gratuity calculator . It's useful for both the employer and the employee. Using a gratuity calculator online is easy just follow the steps to calculate gratuity online :

Step1 : Make sure you have all the required details with yourself.

Step 2 : Select the amount of your basic pay + dearness allowance.

Step 3 : Now select your time period of service. After that your gratuity amount will display on the screen.

Why choose RWR Gratuity Calculator ?

Choose RWR gratuity calculator because of the following reasons :

1. It saves your time and efforts. Instead of doing manual calculation , an employee or employer can calculate the gratuity in two clicks.

2. Our calculator is completely safe. The data in our servers remains protected 24/7.

3. Our calculator never fails. It always provides results with 100% accuracy.

Also, Check - GST Calculator

Gratuity Form

The employee has to fill the gratuity form online to get the gratuity amount. The form name is Form I. So an employee has to fill the following details in the form.

1. Employee’s full name
2. Employee’s full address
3. Department
4. Date of Appointment
5. Date of case of termination of service.
6. Total years of service
7. Amount of wages last drawn
8. Gratuity amount claim

Gratuity Benefits

An employee gets the following gratuity benefits :

Tax saving : Generally gratuity is tax free. But beyond a certain limit tax applies.

Appreciation : It's one of the best ways to give credit to the employees.

Legal Safety : To avoid delay in the payment , the Payment of Gratuity Act 1972 ensures on time gratuity payment.

Healthy Relations : Gratuity builds good relations between the employee and the employer.

Financial Protection : It also provides financial safety to the employee for medical expenses or for travel.

FAQ’s

Q1. What is 15/26 in gratuity calculation?
Ans. In gratuity calculation formula 15 is the number of wages and 26 is the number of working days in a month.

Q2. Does gratuity cut from salary?
Ans. No, gratuity does not cut from the salary. It's a financial reward that an employee receives on resignation from the company.

Q3. What is the maximum limit of gratuity?
Ans. According to the financial year 2024 the maximum limit of gratuity is 25 lakhs . Earlier it used to be 20 lakhs.

Q4. Is 4.5 years eligible for gratuity?
Ans. To be eligible for gratuity it's important for the employee to complete a 5 years of service agreement. In case of emergencies like serious health issues , death of the employee funds can be transferred early on. Employees who are on contractual basis in a company are eligible for a gratuity amount.