Gratuity Calculator Online
A gratuity calculator is an online tool that helps employers and employees to calculate the amount of Gratuity due to an employee based on their years of service, basic salary, dearness allowance, and bonus payment.
What is Gratuity?
Employers may give employees a gratuity to show their gratitude for the services they have provided. The basic salary and length of service are two criteria that affect how many gratuities an employee will receive.
Components of the Gratuity calculator
A gratuity calculator considers the following components when calculating Gratuity:
Basic Salary: The fixed component of an employee's salary is the basis for calculating Gratuity.
Dearness Allowance: The dearness allowance is an allowance paid to employees to offset the impact of inflation on their salaries. It has calculated as a percentage of the basic salary.
Service Years: The years of service refer to the length of time an employee has worked for an employer. It has calculated in full years, with any part of a year ignored.
Bonus Payment: The bonus payment is an additional payment made to employees, usually at the end of the year, as a reward for their performance.
How Gratuity is Calculated
The gratuity rate is usually 15 days' worth of basic salary for every year of completed service. However, in some cases, the gratuity rate may be higher or lower than 15 days' worth of basic salary.
Gratuity = (Basic salary x Length of service x Gratuity rate)/26
G = n*b*15/26
N/n: Number of years (you have worked in the particular company)
B/b: Last drawn basic salary plus DA(Dearness Allowance)
G:Gratuity amount
Example
if individual X has worked with a company for five years, and his basic salary plus DA amounted to Rs. 30,000 monthly, he will receive 5*30000*15/26 = Rs. 86,538.46 as Gratuity.
Gratuity Calculator Benefits
Using a gratuity calculator has several benefits, including:
- 1. Saves time and effort in manual calculations
- 2. Reduces the risk of errors in calculations
- 3. Ensures accurate and fair gratuity payments
How to Use a Gratuity Calculator
To use a gratuity calculator, follow these simple steps:
- 1. Enter the employee's basic salary.
- 2. Enter the length of service in years and months.
- 3. Enter the applicable gratuity rate.
- 4. Tap on the 'calculate' button.
It is essential to input accurate data to ensure an accurate gratuity calculation. Double-check all the inputs before clicking on the 'calculate' button.
Several factors can affect gratuity calculations, including:
- 1. Length of service: The longer the employee's service, the higher the gratuity amount.
- 2. Basic salary: The higher the employee's basic salary, the higher the gratuity amount.
- 3. Gratuity rate: The higher the gratuity rate, the higher the amount.
- 4. Other allowances and benefits: Some countries include others in the gratuity calculation.
Conclusion
A gratuity calculator is a handy tool for employees and employers to calculate the gratuity amount accurately. Employers can ensure fair payments by using a gratuity calculator, while employees can verify the gratuity amount they receive. With the benefits of using a gratuity calculator, employers and employees recommend using this tool to ensure accurate and hassle-free gratuity calculations.
FAQs
Why is Gratuity 15 by 26?
{basic salary dearness allowance /26} x 15 x tenure of service. Here, 26 states the projected number of working days a month, and 15 represents the half-month compensation of 15 days. The per-day wage had calculated by multiplying the basic income DA by 26.
Who is eligible for Gratuity?
Employees working in an organization for more than five years without any employment break are eligible for Gratuity from the employer. Gratuity is a lumpsum amount employers pay their employees as a mark of service recognition.
Is Gratuity taxable?
In some countries, Gratuity is taxable; in others, it is tax-free up to a certain limit.
What is Gratuity?
It is the amount that an employer pays his employee in exchange for services provided to the organization.