Gratuity Calculator

A gratuity calculator is a tool that facilitates online gratuity calculation in a few clicks. The calculator helps users determine the gratuity amount that they are eligible to receive from their company.

Knowing your gratuity amount is significant as it assists in planning for the future and achieving financial objectives in the long term. Our calculator takes into account all the elements of calculation to provide you with the most accurate answers.

It is a handy tool that any employee can use to determine the exact gratuity amount on the basis of his salary, DA and commission. All you have to do is input the details as required on the calculator, and your gratuity amount will be displayed in seconds.

The formula for gratuity is as follows:

G= nb15/26

Where,

G=Estimated gratuity

n=Number of years of service

b=Last drawn salary plus dearness allowance

15= Half month’s compensation

26= Number of working days in a month.

Our calculator incorporates the above formula aptly to ensure that you get the most accurate gratuity amount.

Also Read: Gratuity: Gratuity Calculation, Eligibility, and Gratuity Formula

The TATA AIG calculator for gratuity works on the basis of the mathematical formula, which is the basis of gratuity calculation. It carries out complex mathematical calculations with the help of the values provided to give you the exact gratuity amount.

To use the calculator, you must input the number of years of service, the last drawn salary and dearness allowance. These inputs mean the following:

• Completed Years of Service : It is the number of years for which an employee has worked in an organisation. For the purpose of calculating gratuity, we need to round off the number of years of service to the nearest single digit if the period is more than 6 months in a year. For instance, if you have worked for 12 years and 8 months, you must input the ‘n’ value as 13.

• Last Drawn Salary : This variable includes the sum of your last drawn salary and dearness allowance. Besides, if your company pays incentives in the form of commission on sales, it must also be included as a part of your salary for gratuity purposes.

Note: In the formula, 15 stands for 15 days’ wages per year, for which the gratuity is paid.

Also Read: Gratuity Eligibility Before and After Completion of 5 Years

Gratuity can be calculated by simply using the formula for gratuity and replacing it with the values applicable in individual cases. Let us understand how gratuity calculation is done with examples.

Category 1 -Employees Covered Under Payment of Gratuity Act

Example 1:

Amit has worked with ZBC Ltd. for 12 years. His last drawn salary is ₹35,000 and the dearness allowance is ₹15,000. The following will be the gratuity calculation.

Gratuity = nb15/26

Gratuity = 1250,000 15/26

Gratuity Due = ₹3,46,154

Example 2:

Jaya worked for a multinational company for 8 years and 7 months. Her last drawn salary was ₹38,000 and the dearness allowance was ₹20,000. Her gratuity calculation will be as follows:**

Gratuity = 9* 58000*15/26

Gratuity= ₹3,01,154

Note:** Jaya has worked here for 8 years and 7 months. Since the duration of 7 months is more than 6 months in a year, it is considered a whole year and rounded off to 9 years.

Example 3:

Sachin worked for an organisation for 12 years and 3 months. His last drawn salary was ₹25,000; dearness allowance was ₹15,000 and commission was ₹5000.

Gratuity = 124500015/26

Gratuity = ₹3,11,538

Note:** Sachin worked for 12 years and 3 months. Since the period of 3 months is less than half a year, it is rounded off to 12 years.

Category 2 -Employees Not Covered Under Payment of Gratuity Act

There is another gratuity formula that is applicable to employees who are not covered under the Payment of Gratuity Act. For such employees, the gratuity would be paid on the basis of a half-month salary for each completed year of service.

Gratuity = (15* average of last 10 months salary number of years employed)/30

Here,

Average of last 10 months salary = salary for last 10 months, including basic, DA and commission.

No. of years employed = Each completed year of service. ( Does not include a part of the year)

15= Half months’ salary

30= Number of days in a month.

Example 1:

Arjun earns a basic salary of ₹30,000 and a dearness allowance of ₹10,000, and he has worked in a company for 7 years. However, the employer is not covered under the gratuity act.

Gratuity= (15* 30,000*7)/30

Gratuity amount = ₹1,05,000.

Note: This is only for the reader’s information. The TATA AIG calculator does not support the calculation of the gratuity for employees who are not covered under the Gratuity Act.

The TATA AIG gratuity calculator makes your calculation easy and error-free with its effortless work. You can use it to find out the gratuity amount in a few clicks by following these steps:

• Step 1: Access the TATA AIG Gratuity Calculator Tool : Go to the TATA AIG gratuity calculator tool at the top of this page.

• Step 2: Fill out the Details : The next step is to fill out the details in the respective columns in the calculator. You must provide the monthly income (basic + DA + commission) and select the tenure of service. (Remember to round off the tenure to the nearest number)

• Step 3: Calculate : Once you provide all the information in the calculator, you will see the gratuity amount displayed on the screen.

• Step 4: Adjustment : You can also change/adjust the inputs in the calculator to find out the gratuity amount using different input values.

Once you find out the gratuity amount with the help of the calculator, you can plan how and where to invest your gratuity amount to grow your wealth and secure your future.

The benefits of the TATA AIG gratuity calculator tool cannot be emphasised enough, as it simplifies the calculation process to a great extent. All you have to do is input the monthly pay and tenure and the gratuity amount will be displayed instantly.

• Gratuity Estimation : By entering the basic information into the calculator, you can get an estimate of the gratuity that you will receive from the organisation.

• Free Resource : The TATA AIG gratuity calculator is a free online tool that anyone with an internet connection can access. There are no charges for using our tool and you can calculate gratuity multiple times without incurring any cost.

• Precise Calculation : The calculator works on the gratuity formula as specified in the Payment of Gratuity Act, 1972. Hence, there is no chance of any error, and you can get accurate answers based on the inputs you provide.

• Easy to Use : Our online calculator does not require users to have any complex technical knowledge. It is an easy-to-use tool with a simple interface that any individual with basic computer knowledge can use to calculate gratuity online.

• Aids in Wealth Planning : Once you know the gratuity amount you are eligible to receive from the company, you can plan your next steps to grow your wealth. It assists you to explore various investment options and plan for a secure future.

• Data Security : Our online calculator is a highly secure tool that is designed to provide you with answers without compromising the security of your data. We ensure your data is safe and secure on our servers at all times by implementing all the necessary security measures.

• Saves Time : Using our calculator saves you precious time that you would otherwise spend calculating gratuity manually.

Also Read:

Employee Benefits in India

Statutory Benefits in India

Now that you know gratuity calculation can be completed effortlessly with the TATA AIG calculator, here are some crucial facts related to gratuity that you must know.

Eligibility for Gratuity

• Gratuity is monetary compensation from the company to its employees for their continuous service and contribution to the company. However, not every employee is entitled to receive gratuity. The Payment of Gratuity Act of 1972 applied to all organisations that employ more than ten employees. Here are the eligibility criteria for employees:

• An employee must qualify for retirement benefits.

• An employee must have worked in the organisation for at least five years.

• The employee must retire from the organisation.

The employee has suffered from disability due to an accident or illness, or he has passed away.

Taxation Rules for Gratuity

While gratuity is an appreciation payment from the employer, it has tax implications, which one must be aware of.

1. Gratuity received by employees working in government organisations is exempt from tax.

2. Gratuity received by non-government employees or employees working in private organisations can claim gratuity exemption for the least of the following amounts.

• ₹20 lakhs

• Actual gratuity received

• Eligible gratuity

For example, an employee received a gratuity payment of ₹12 lakhs from his employer. However, he is eligible to receive only ₹2,50,000 and the exempt limit for gratuity is ₹20 lakhs. In this case, the exempt gratuity is the least of the amount, i.e. ₹2,50,000. The remaining amount of ₹9.5 lakhs (12 lakhs - 2.5 lakhs) will be taxable as per the rules of the Income Tax Act.

3. As per the Income Tax Act, gratuity is exempt up to ₹20 lakhs u/s 10(10). This exemption is applicable in case of employee retirement, resignation, death or disablement. (For employees covered under the Payment of Gratuity Act 1972).

4. Employees who are not covered under the Payment of Gratuity Act 1972 can avail of tax exemption for gratuity up to ₹10 lakhs.

Note: It must be noted that an individual cannot claim a gratuity exemption of more than ₹20 lakhs in his entire life.

Once you have found out the gratuity amount that you are eligible to receive, you can start exploring the various investment options to grow your wealth. While there are plenty of choices available, you must choose an investment that matches your risk appetite and financial goals.

Here are some options to consider:

• Fixed Deposits : Parking your hard-earned money in a fixed deposit is one of the safest options if your risk appetite is low. Fixed deposit investment ensures you get regular income while keeping your money safe.

• Equity Mutual Funds : You can consider investing your money in equity mutual funds if you want higher returns and have the capacity to take high risks. This investment option is suitable for the young investor and there are plenty of options to consider.

• Real Estate : Those who wish to invest in properties may consider investing their gratuity amount in a property. Alternatively, one can also invest in Real Estate Investment Trusts (REITs).

• Public Provident Fund : Individuals who are looking at tax-efficient investment options may consider PPF to put their gratuity amount. PPFs come with a lock-in period of 15 years and also provide tax benefits under the income tax act.

• Stock Market : Another option for investing your gratuity is the stock market. Those who are capable of taking more risk and have a sound knowledge of the stock market must surely consider investing in shares and stocks.

• National Pension Scheme : It is a voluntary, long-term retirement saving option with tax benefits. When investing in NPS, individuals have the liberty to include both debt and equity instruments, leading to higher returns on their wealth.

Gratuity is an excess payment received by an employee over and above his salary. This amount, if invested smartly, can assist in wealth growth and financial stability for the employee. However, the calculation for gratuity is based on a mathematical formula, which may be prone to errors if done manually.

The TATA AIG calculator tool is a simplified and free tool, which is carefully designed to assist individuals in finding out their accurate gratuity amount. Our tool is easily accessible, free to use and has a simple interface, which makes it a great choice. Just by filling out the basic details, you can find out the gratuity amount instantly.

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