-->



Gratuity Calculator

Gratuity is provided by the employer to their employees for their services during the period of employment. As per gratuity act of 1972, an employee needs to complete a minimum of 5 years in an organisation to be eligible for gratuity. This act is applicable if your organisation has more than 10 employees.




About Fintra's Gratuity Calculator?

Fintra's Gratuity Calculator is an online tool that can assist you to estimate the amount of gratuity you will earn once you leave a job after completing at least five years in the service of a company. Our gratuity calculator works on the gratuity formula which calculates the gratuity amount concerning the input values such as last drawn monthly income, several years (including the months) in service with the company, dearness allowance, etc.

 

How to use Fintra's Gratuity Calculator?

To obtain accurate results you need to provide the following data:

  1. Current Monthly Basic Salary
  2. Current Monthly Dearness Allowance
  3. No. of Years of Service (5 Years min)

When all data has been filled into the Fintra's Gratuity Calculator click on “Submit”, and instantly results will be displayed.

 

Gratuity Payment Formula

The two vital factors, employee’s last drawn salary and period of service, are included for the formula for calculating gratuity payment. The formula is as follows: 

Gratuity = n*b*15/26

where,

n = tenure of service completed in the company

b = last drawn basic salary + dearness allowance

Points to note: 

  1. As per the Gratuity Act, the amount of gratuity cannot be more than Rs 20 lakh. The excesses are treated as ex-gratia.
  2. If the last few months in the last year of employment are more than 6 months, then it will be rounded to the next number. Suppose your tenure of service is 15 years 7 months, then you receive a gratuity for 16 years. Otherwise for 15 years if it happens to be 15 years 4 months.

 

FAQ’s on Gratuity Calculator 

 

What is Gratuity?

Gratuity is a lump-sum amount which an organization has to pay to its employees when they leave or retire from the organization's job. After completing five constant years in an organization, the person is entitled to receive gratuity. Also, there shouldn’t be any gap in the duties of the worker with that company. Thus, the gratuity serves as a retirement privilege for the worker.

 

Who Pays Gratuity?

Gratuity is paid by the employer, either from their fund or seek the help of a life insurer and purchase a group gratuity plan. Unlike in EPF, the employee doesn’t have to contribute to gratuity. It's a rule that gratuity has to be paid by the company to the employee no matter what. This holds even if the organisation starts to suffer from heavy losses.

 

What is the eligibility criteria for obtaining gratuity? 

  1. Employee/worker should be employed on salary/wages.
  2. At the time of superannuation, resignation, or retirement, the employee should serve a continuous service of five or more than five years.
  3. In case of death or disability, gratuity is payable if service is of less than five years.
  4. The company or establishment in which employee works should come under the Gratuity Act 1972
  5. When you reach the eligibility of earning your gratuity amount, to apply for it, you have a certain time frame that is within 30 days from when it becomes payable.
  6. When you already know the date of your superannuation or retirement, you can then apply for gratuity before the time frame of 30 days.

 

If individuals resign after completing 4.5 years, are they eligible for gratuity? 

No, individuals after completing 4.5 years aren't eligible for gratuity. However, as per the Madras High Court rule, individuals who have completed 240 days in their fifth year of service can obtain gratuity. Moreover, if the employee dies during its employment, its legal heir is eligible for receiving the gratuity even if it has not completed five years of service

 

Any upper limit to the gratuity that an employee receives? 

Yes, irrespective of the number of years of service of the employment, the company cannot exceed more than Rs. 20 Lakhs of gratuity.

 

Any specific time by which the gratuity must be paid? 

As per the government mandate, employers have to remit the gratuity within 30 days from the date of full and final settlement of the employee. If there's any delay, the employer is then liable to pay simple interest on the gratuity from the due date until the date when payment is made.

 

Is it possible to add a nominee for gratuity? 

Yes, at the time of joining the organisation, the employee can fill Form F to add a nominee. 

 

Do contractual and temporary employees qualify for gratuity? 

Yes, temporary and contractual employees are eligible for gratuity. But apprentices are not eligible for gratuity. 

 

What if an employee is eligible to receive more than Rs. 20 lakh gratuities? 

As the amount of gratuity cannot exceed 20 lakhs, thus even if an employee is eligible for more than Rs. 20 lakhs, the employer will only pay Rs. 20 lakhs as gratuity. 

Browse more

Downloads