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an
amount between 50,000 and 100,000,00
rupees.
Years of Service
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value between 5 to 30.
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You will earn a gratuity amount of
₹ 0
after 30 years of services
What is Gratuity Calculator?
A gratuity is a form of compensation that employers pay eligible employees. It is governed by the Payment of Gratuity Act, 1972. Employees who have completed at least five years of working in a company are eligible for a gratuity amount. The lump sum is paid out in exchange for the services rendered by the employee during their employment.
To find the amount payable, you need to know the gratuity rule and the formula for gratuity. The amount typically depends on the last drawn salary and the number of years of service rendered. In some exceptional cases, the gratuity amount may be payable even if the employee has not completed 5 years of service. Some examples of such exceptions include the employee suffering an accidental disability in the course of work or being diagnosed with any illness.
What is the Gratuity Calculation Formula?
The formula for gratuity computation uses key details of employment like the tenure of working and the last salary drawn. Check out the formula to calculate the gratuity amount.
Gratuity = Last Drawn Salary x Number of Years of Employment x 15/26
The last drawn salary includes both the basic salary and the dearness allowance (DA). Let us discuss an example to understand the gratuity rule better. Say you have worked in a company for 10 years and your last drawn salary was Rs. 50,000 a month. In that case, using the formula for gratuity computation, this is what you have:
Gratuity:
= Last Drawn Salary x Number of Years of Employment x 15/26
= Rs. 50,000 x 10 x 15/26
= Rs. 2,88,462
The employment tenure is typically rounded off to the nearest whole year. For instance, if you have been employed for 10 years and 8 months, the tenure is rounded up to 11 years. Conversely, if you have worked in an organisation for, say 10 years and 3 months, it will be rounded down to 10 years.
How Can a Gratuity Calculator Help You?
Gratuity payments can be extremely beneficial for employees because the lump sum payout can be invested for the future or used to check off a financial goal. So, it is important to understand the amount of gratuity that you will be eligible for, if any. A gratuity calculator helps you with this.
The gratuity rules can be confusing for the average employee. Furthermore, they may also be subject to change, depending on any amendments to the Payment of Gratuity Act. A gratuity calculator removes this confusion and brings some much-needed clarity for employees.
With a gratuity calculator, you can save time, run multiple iterations to find the most optimal retirement scenario and determine the maximum amount of gratuity you can earn.
How Do You Use the Research 360 Gratuity Calculator?
To calculate gratuity online using the gratuity calculator from Research 360, you need to first ensure that you have key employment details available — such as your employment tenure and the amount of salary you last earned. Then, follow these easy steps.
Step 1:Enter the details of your last monthly salary. This includes your basic pay and dearness allowance.
Step 2:Enter the number of years of service (after rounding the tenure up or down as needed).
Step 3:Submit these details in the gratuity calculator online.
The gratuity calculator then uses the formula for gratuity to find the total sum payable to you.
What Are the Advantages of Using the Research 360 Gratuity Calculator?
When you use the Research 360 gratuity calculator, you get to experience various advantages that make financial planning easier. These benefits include:
Time Savings
Calculating gratuity manually can be time-consuming. However, with the Research 360 gratuity calculator, you can quickly determine their gratuity amount without spending much time figuring out the complex formula or double-checking the mathematics.
Simplicity of Use
The calculator's user-friendly interface is another advantage. It requires only basic inputs like your last monthly salary and years of service. This simplicity ensures that everyone can easily understand and utilise the tool, regardless of their financial expertise.
Multiple Scenario Analysis
The gratuity calculator allows you to run multiple iterations quickly. This way, you can explore various retirement scenarios and determine the maximum gratuity amount you could potentially earn under different circumstances or timelines.
Better Clarity and Accuracy
Often, there is quite a bit of ambiguity surrounding gratuity rules and calculations. The Research 360 gratuity calculator removes these issues by providing clear and precise results. This precision ensures that you can accurately estimate your gratuity amount.
Gratuity Calculator FAQs
To calculate the gratuity amount manually, you can use the formula for gratuity. However, if this is tedious and difficult, you can make things easier by using the gratuity calculator instead.
An organisation may refuse to pay gratuity if the employee has not worked in the company for the required period or if they have caused a loss to the company due to unethical actions or negligence. In such instances, the onus is on the organisation to justify the non-payment of gratuity.
According to the Payment of Gratuity Act, 1972, employers are required to pay the gratuity amount within 30 days from the date of application.
You can invest the lump sum gratuity amount in any way you see fit. Some common options include fixed deposits, real estate, equity shares, gold or annuity schemes. It is advisable to diversify across these investments to minimise the risk.
In the case of an employee’s death, the gratuity amount is calculated based on the number of years of service and the last drawn salary. This amount is limited to Rs. 20 lakhs and will be paid to the employee’s nominee or legal heir.
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