Do you know what gratuity means in a salary? Are you unsure whether you will be eligible for gratuity after retiring from your long working career? If you are eligible for gratuity, are you unsure of how much you will receive once you retire from your employer?
There is a great deal of relevance to these concerns. However, in this digital age, online tools can help you find answers to all your questions. It is easy to use an gratuity calculator online. You will see the exact amount of gratuity you will receive.
GRATUITY: What is it?
An employer pays a lump sum to his employee upon his retirement as a gratuity. During the service year of his employees, he wishes to express his appreciation for their long and loyal service.
In accordance with the Payment of Gratuity Act 1972, an employer must pay this amount to employees who have served the company for a continuous period of at least five years.
How Do You Qualify for Gratuities?
In order to qualify for gratuity, you must have worked for an organization for at least five years without any service breaks in between.
* Based on the number of whole years of service, your number of years of service will be determined. Your gratuity calculation will be increased by one year if your service years are composed of 5 (or more) whole years and a few months. In that case, if the number of months is less than 6, the service year will not be counted.
* Your years of service will be determined by the number of years you have worked, for example, if you have worked for 6 years and 8 months. When calculating your gratuity, you will be considered to have worked only for 6 years if you have worked for 6 years and 5 months.
To date, there has been no upper limit on gratuities. It was considered a bonus or ex-gratia if the amount was more than Rs10,000. Therefore, that amount was taxed.
* This ceiling has recently been raised for employees of the central government and the private sector. They will now receive a gratuity of up to $20,000. There is no tax on this amount. You will get this exemption based on which bracket you belong to.
You are free to accept a higher gratuity than what you actually deserve. If you are an employee of a particular type of business, however, you will have a different gratuity exemption limit. A higher exemption is available to central government employees.
* For employees who have worked for more than one employer for a period of five years (or more), multiple gratuities may be available. Your cumulative gratuity amount will, however, be taken into account when computing your tax liability.
Gratuity calculation: How does it work?
It is important to know how to calculate gratuity if you are eligible to receive it from your employer. Based on your last draw of basic salary and DA, this calculation will be made. According to your company’s employment record, it will also depend on your year of service.
It is only necessary that you have accurate information regarding – in order to use this tool
* The basic salary you last drew,
* When you retired, your DA was as follows:
* How many years of service you have.
The Gratuity formula is as follows:
(Last Drawn Basic Salary + Dearness Allowance) 15/26 years of service = Gratuity
The duration of service needs to be more than five years in order to claim gratuity from your employer. Continuous service is also required. Prior to claiming your gratuity, you must have completed at least five years of continuous service if you have changed jobs and re-joined later.
INDmoney Gratuity Calculator: How to use it?
The INDmoney gratuity calculator is simple to use and easy to understand.
Knowing your exact gratuity amount is as easy as following two steps:
Step 1: To use the gratuity calculator online, you can visit the INDmoney website.
Step 2: Enter your last drawn salary, including basic and DA. The number of years you have worked for your company should also be entered.
There you have it!
Your total gratuity amount will be displayed on your screen instantly by the INDmoney gratuity calculator.
A gratuity calculator’s usefulness
You can get results almost instantly with the gratuity calculator.
Calculating your gratuity with this tool is a very comprehensive and convenient way of planning your future finances.
Employers can also use this gratuity calculator to understand their liability for paying employees’ gratuities on behalf of their employees.
It is easier to follow the exact calculations that are involved in calculating gratuity thanks to online gratuity calculators.
In conclusion:
If you know the number of years you’ve served and your last drawn salary, then an online gratuity calculator is the right tool for you. As a reward for your hard work, consistency, and loyalty, you can plan your retirement without actually worrying about how much gratuity you will receive.