Gratuity Calculator

/content/icici-direct/en/spreadsheet-apis/gratuity-cal
right-image-calculator
false
gratuity-calculator
Calculated Gratuity Amount
style
block-bottom-red-after-v2

Investment Ideas

Fixed Deposits
/en/fd-and-bonds/icici-bank-fd
National Pension Scheme
/en/national-pension-scheme
Mutual Funds
/en/mutual-funds
Stock SIP
https://www.icicidirect.com/equity-products/stock-sip

What is a Gratuity Calculator?

A Gratuity Calculator is a financial tool that helps employees estimate the amount of gratuity they are entitled to receive upon leaving their job after completing a minimum of five years of continuous service. Gratuity is a lump-sum payment made by employers as a token of appreciation for the employee's long-term service. The calculator takes into account key factors such as the employee's last drawn salary, the number of years worked, and whether the employer falls under the Payment of Gratuity Act, 1972. By inputting these details, the Gratuity Calculator quickly provides an estimate, allowing employees to plan their finances better and understand the benefits they can expect upon retirement or resignation.

How Does a Gratuity Calculator Work?

Employees with longer tenure and higher basic salaries are eligible for higher gratuity amounts. The gratuity is calculated based on the employee's last working day. A Gratuity Calculator works through the following steps:

Formula of Gratuity Calculator

The formula used by a Gratuity Calculator under the Gratuity Act is: Gratuity= n*b*15/26, where n denotes the tenure of service an employee has completed, and b denotes the last drawn salary plus dearness allowance.

style
no-padding-top
Benefits of Gratuity Calculator
true
Accurate Estimation
Provides a precise calculation of gratuity based on salary and tenure.
Accurate Estimation
Provides a precise calculation of gratuity based on salary and tenure.
Time-Saving
Quickly computes the gratuity amount, saving time and effort.
Financial Planning
Assists in better financial planning for retirement or job change.
Transparency
Offers clarity on the gratuity amount an employee is entitled to.
User-Friendly
Easy to use, requiring only basic input details for calculations.
style
faq-smoky-background-color, no-padding-top, block-box-shadow, block-bottom-red-after-v2, no-padding-bottom

How to Use the Gratuity Calculator?

Using a Gratuity Calculator is simple and efficient. Start by entering the last drawn salary, which includes the basic salary and dearness allowance. Next, input the total number of years of service with the current employer. After that, indicate whether your employer falls under the Payment of Gratuity Act, 1972. Once these details are entered:

  1. Click 'Calculate': The calculator will instantly process the inputs.
  2. View Results: See the estimated gratuity amount you are entitled to receive.
  3. Adjust Inputs: Modify the salary, years of service, or employer type to explore different scenarios.
  4. Analyse: Use the estimated gratuity amount to plan your financial future, especially in the context of retirement or a job change.

Example of Using a Gratuity Calculator

Suppose an employee has a last drawn basic salary plus dearness allowance of ₹30,000 and has completed 10 years of service with an organization covered under the Gratuity Act. Using the Gratuity Calculator, the estimated gratuity amount would be ₹1,73,077. This calculation helps the employee understand the benefits they will receive, allowing for better financial planning as they approach retirement.

Benefits of Using ICICI Direct Gratuity Calculator Online

1.  Easy to Use:  User-friendly interface for quick and easy calculations.
2.  Instant Results:  Provides immediate estimates of the gratuity amount.
3.  Customizable Inputs:  Allows for adjustments to salary, tenure, and employer type.
4.  Accurate Forecasting:  Delivers reliable results for better financial planning.
5.  Secure Platform:  Trusted and safe for all your financial calculations and data privacy needs.

style
no-padding-bottom
Gratuity Calculator FAQs
5
How is retirement gratuity calculated?
Retirement gratuity calculation in India depends on whether the employer is covered under the Payment of Gratuity Act, 1972. Generally, it's calculated based on your last drawn basic salary plus dearness allowance, multiplied by 15/26 (for covered employers) or 15/30 (for non-covered employers), and then by your years of service. A minimum of 5 years of continuous service is usually required.
How is retirement gratuity calculated?
Retirement gratuity calculation in India depends on whether the employer is covered under the Payment of Gratuity Act, 1972. Generally, it's calculated based on your last drawn basic salary plus dearness allowance, multiplied by 15/26 (for covered employers) or 15/30 (for non-covered employers), and then by your years of service. A minimum of 5 years of continuous service is usually required.
What is gratuity?
Gratuity is a lump-sum payment given by an employer to an employee as a token of appreciation for their services, typically upon leaving the company. In India, it's governed by the Payment of Gratuity Act, 1972, and usually requires a minimum of five years of continuous service. It's a significant retirement or exit benefit.
Is gratuity calculated on basic salary?
Yes, gratuity calculation primarily uses your last drawn basic salary, but it also includes your Dearness Allowance (DA). Other allowances like HRA or conveyance are generally excluded. This combined figure (basic + DA) is crucial for determining the final gratuity amount based on your years of service.
Does gratuity amount has any upper or lower limit?
Yes, there's an upper limit for gratuity. For private sector employees covered under the Payment of Gratuity Act, 1972, the maximum tax-exempt gratuity amount is INR 20 lakhs. For central government employees, this limit has been increased to INR 25 lakhs. There's no specific lower limit on the calculated amount, but eligibility usually requires 5 years of continuous service.
What is 15/26 in gratuity calculation?
In gratuity calculation for employees covered by the Payment of Gratuity Act, 1972, 15/26 signifies: 15 days' salary for each completed year of service, divided by 26, which represents the assumed number of working days in a month (excluding weekly offs). This ensures the gratuity reflects actual working days.
When is gratuity received by an employee?
An employee typically receives gratuity upon retirement, resignation, or termination, provided they have completed at least five years of continuous service. In case of death or disability, the five-year rule doesn't apply. Employers are legally mandated to pay the gratuity amount within 30 days of it becoming due.
Will a contract employee receive Gratuity on completing five years in service?
Yes, a contract employee in India can be eligible for gratuity upon completing five years of continuous service with the same employer, even if working through different contractors, if the principal employer maintains control over their work. The Payment of Gratuity Act, 1972, considers "continuous service" broadly.
How much time does it take for an employer to release the Gratuity amount?
Under the Payment of Gratuity Act, 1972, employers are legally required to release the gratuity amount within 30 days from the date it becomes payable (e.g., last day of employment). If there's a delay, the employer is liable to pay simple interest on the outstanding amount until it's settled.
What are the income tax limitations for Gratuity?
Gratuity has specific tax exemptions. For private sector employees covered by the Gratuity Act, the least of: actual gratuity received, 15 days' salary for each year of service, or ₹20 lakhs is exempt. Government employees receive full tax exemption. Under the new tax regime, from FY 2024-25, gratuity up to ₹5 lakhs is also exempt.

*Please note Brokerage would not exceed the SEBI prescribed limit.

style
no-padding-top, no-padding-bottom