Gratuity Calculator
Calculate your gratuity amount accurately with our comprehensive calculator. This tool helps employees estimate their gratuity benefits based on their salary and years of service as per the Payment of Gratuity Act, 1972.
Key Points
- Eligible after 5 years of continuous service
- Tax-free up to ₹20 lakhs
- Based on last drawn salary
- Maximum service period: 20 years
Gratuity Calculation Result
About Gratuity
Gratuity is a monetary benefit given by an employer to an employee for services rendered to the organization for a long period. It is a defined benefit plan under the Payment of Gratuity Act, 1972.
Frequently Asked Questions
Eligibility criteria for gratuity:
- Minimum 5 years of continuous service
- Applicable to organizations with 10+ employees
- Valid for all types of employees
- No minimum salary requirement
- Applies to both private and public sectors
Gratuity calculation components:
- Formula: Last Drawn Salary × 15/26 × Years of Service
- Basic salary and DA are considered
- Service period capped at 20 years
- Partial years considered proportionally
- Different rules for seasonal employees
Taxation rules for gratuity:
- Tax-free up to ₹20 lakhs under Section 10(10)
- Excess amount taxed as salary income
- Different rules for government employees
- Tax calculation based on average tax rate
- Relief available under Section 89(1)
Salary components for calculation:
- Basic salary is mandatory
- Dearness Allowance (DA) included
- Commission on sales included if fixed percentage
- HRA and other allowances excluded
- Bonus not considered for calculation
Special provisions:
- 5-year service requirement waived
- Immediate payment to nominees/family
- Full gratuity amount payable
- Special tax benefits may apply
- Additional company benefits possible
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