{"id":4435,"date":"2023-04-03T12:31:49","date_gmt":"2023-04-03T07:01:49","guid":{"rendered":"https:\/\/fatakpay.com\/blog\/?p=4435"},"modified":"2025-11-11T17:04:07","modified_gmt":"2025-11-11T11:34:07","slug":"what-is-a-gratuity-calculator","status":"publish","type":"post","link":"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/","title":{"rendered":"What is a Gratuity Calculator?"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Introduction_to_Gratuity_Calculator\" >Introduction to Gratuity Calculator:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Before_we_introduce_you_to_the_Gratuity_Calculator_let_us_first_understand_the_concept_of_Gratuity_in_detail\" >Before we introduce you to the Gratuity Calculator, let us first understand the concept of Gratuity in detail:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#What_are_the_eligibility_criteria_for_the_payment_of_gratuity\" >What are the eligibility criteria for the payment of gratuity?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Gratuity_Calculation\" >Gratuity Calculation:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Lets_understand_this_with_an_example\" >Let\u2019s understand this with an example:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Lets_take_another_example\" >Let\u2019s take another example:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Latest_Advancements_in_Regard_to_Gratuity\" >Latest Advancements in Regard to Gratuity:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Calculation_of_Gratuity_in_Case_of_Death_of_an_Employee\" >Calculation of Gratuity in Case of Death of an Employee:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Few_Significant_Points_About_Gratuity\" >Few Significant Points About Gratuity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Finally_we_reach_the_gratuity_calculator_section\" >Finally we reach the gratuity calculator section :)&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#Additional_Links\" >Additional Links:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-a-gratuity-calculator\/#About_FatakPay\" >About FatakPay:&nbsp;<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction_to_Gratuity_Calculator\"><\/span>Introduction to Gratuity Calculator:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Gratuity refers to the amount that an employer pays his employee, in return for services offered by him to the company. Find out more about Gratuity by reading our blog. We have also included a <strong>gratuity calculator<\/strong> for your reference.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Before_we_introduce_you_to_the_Gratuity_Calculator_let_us_first_understand_the_concept_of_Gratuity_in_detail\"><\/span>Before we introduce you to the Gratuity Calculator, let us first understand the concept of Gratuity in detail:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The amount that a corporation pays its employee as a &#8220;gratuity&#8221; for services rendered to it is referred to as a gratuity. The gratuity sum, however, is only granted to employees who have worked for the business for five years or longer. The 1972 Payment of Gratuity Act controls it.<\/p>\n\n\n\n<p>If an employee becomes handicapped in an accident or due to a disease, they are eligible to receive their gratuity before the five-year mark. The amount of your gratuity is primarily based on your most recent income and the number of years you have worked for the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_eligibility_criteria_for_the_payment_of_gratuity\"><\/span>What are the eligibility criteria for the payment of gratuity?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>They ought to be qualified for retirement benefits<\/p>\n\n\n\n<p>The person resigns after five years with a single employer<\/p>\n\n\n\n<p>They retire from work<\/p>\n\n\n\n<p>They become disabled, or pass away as a result of a sickness or accident<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gratuity_Calculation\"><\/span>Gratuity Calculation:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>n*b*15\/26<\/p>\n\n\n\n<p>n = the number of years served in the company<\/p>\n\n\n\n<p>b = the last <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/pros-and-cons-of-advance-salary\/\" target=\"_blank\" rel=\"noopener\">drawn salary<\/a><\/mark> including dearness allowance<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lets_understand_this_with_an_example\"><\/span>Let\u2019s understand this with an example:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Person Z has served a company for 6 years. The salary of the person is Rs.60,000<\/p>\n\n\n\n<p>Therefore the Gratuity amount will be: (6*60,000*15)\/26 = Rs.2,07,692.31<\/p>\n\n\n\n<p>Nonetheless, a company has the option of giving an employee a larger gratuity. <\/p>\n\n\n\n<p>The organisation may pay gratuities even if it is not covered by the Act. Yet for each year that has passed, a person&#8217;s half-month wage is used to determine how much gratuity they will receive. The pay package consists of a <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-ctc\/\" target=\"_blank\" rel=\"noopener\">base salary<\/a><\/mark>, a commission (depending on sales), and a depreciation allowance.<\/p>\n\n\n\n<p>Alternate Gratuity formula:<\/p>\n\n\n\n<p>(15 * Last <strong>drawn salary<\/strong> amount * length of service) \/ 30 = gratuity amount.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lets_take_another_example\"><\/span>Let\u2019s take another example:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Person Y has served a company for 7 years and <strong>draws a salary<\/strong> of Rs.80,000. The gratuity amount in this case is: (15*80,000*7)\/30 = Rs.2,80,000<\/p>\n\n\n\n<p>For each completed six-month period, the gratuity amount is equivalent to one-fourth of the employee&#8217;s most recent basic wage. The amount of the retirement gratuity that is due is 16 times the base wage. However, there is a Rs. 20 lakh cap on it.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Latest_Advancements_in_Regard_to_Gratuity\"><\/span>Latest Advancements in Regard to Gratuity:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The cap on tax-free gratuities for private-sector employees was increased from Rs. 10 lakh to Rs. 20 lakh, which is one of the most significant developments. After the 7th Central Pay Commission was announced and put into effect, the same was done for employees of the central government.<\/p>\n\n\n\n<p>The Union Government has also suggested a number of security measures for the workforce in light of the recent pandemic and virus outbreak throughout the country. Nirmala Sitharaman, the finance minister, recently revealed in one of her news conferences that the government intends to offer the payment of gratuity following the conclusion of a year of service. This will apply to a company&#8217;s fixed-term employees.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Calculation_of_Gratuity_in_Case_of_Death_of_an_Employee\"><\/span>Calculation of Gratuity in Case of Death of an Employee:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The gratuity benefits are determined based on the employee&#8217;s length of service in the event of death. The sum is however limited to a maximum of Rs. 20 lakh. The rates at which the gratuity will be paid in the event of an employee&#8217;s death are shown in the following table:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Tenure of Service<\/td><td>Amount payable towards gratuity<\/td><\/tr><tr><td>Less than a year<\/td><td>2 * basis salary<\/td><\/tr><tr><td>1 year or more but less than 5 years<\/td><td>6 * basic salary<\/td><\/tr><tr><td>5 years or more but less than 11 years<\/td><td>12 * basic salary<\/td><\/tr><tr><td>11 years or more but less than 20 years<\/td><td>20 * basic salary<\/td><\/tr><tr><td>20 years or more<\/td><td>Half of the basic salary for each completed six-monthly period. However, it is subject to a maximum of 33 times of the <strong>basic salary<\/strong>.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Few_Significant_Points_About_Gratuity\"><\/span>Few Significant Points About Gratuity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A gratuity exceeding Rs. 10 lakh may be given to an employee by their employer; in this case, the tax exemption will be established in accordance with the standards described above under taxation.<\/p>\n\n\n\n<p>If an employee has been asked to leave a job due to misconduct, the employer has the right to refuse payment of gratuity to that employee.<\/p>\n\n\n\n<p>When an employee passes away, the gratuity is paid to their representative or heir. The amount of tax due by the receiver is calculated under the category of &#8220;income from other sources.&#8221;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Finally we reach the gratuity calculator section \ud83d\ude42&nbsp;<\/h3>\n\n\n\n<p>Here is the link to the Gratuity Calculator:Gratuity Calcutor<\/p>\n\n\n\n<p>Steps to use the <strong>Gratuity Calculator<\/strong>:<\/p>\n\n\n\n<p>Enter the number of years of service<\/p>\n\n\n\n<p>Enter the <strong>salary <\/strong>(Including the dearness allowance)<\/p>\n\n\n\n<p>And you are done!<\/p>\n\n\n\n<p>In the end, you get the gratuity value<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Additional_Links\"><\/span>Additional Links:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>We hope that the blog was a pleasant read. Do check out our blogs and LinkedIn articles as well.<\/p>\n\n\n\n<p><a href=\"https:\/\/fatakpay.com\/blog\/what-is-epf\/\" target=\"_blank\" rel=\"noopener\">https:\/\/fatakpay.com\/blog\/what-is-epf\/<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/fatakpay.com\/blog\/what-is-tds\/\" target=\"_blank\" rel=\"noopener\">https:\/\/fatakpay.com\/blog\/what-is-tds\/<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/pulse\/what-nbfc-fatakpay\/?trackingId=8cKhQh2KDUFSZcz6WLJESA%3D%3D\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/pulse\/what-nbfc-fatakpay\/?trackingId=8cKhQh2KDUFSZcz6WLJESA%3D%3D<\/a><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"About_FatakPay\"><\/span>About FatakPay:&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/\" target=\"_blank\" rel=\"noopener\">FatakPay<\/a><\/mark> provides virtual credit facilities for all. It&#8217;s available on your phone and caters to your everyday needs in both online and offline formats. Payments are done seamlessly through <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-upi\/\" target=\"_blank\" rel=\"noopener\">UPI<\/a><\/mark>\/QR codes. The solution provides an almost zero cost, free, quick, transparent and secure way to transact in a multilingual format with a Scan Now, Pay Later facility and easy repayment options.<\/p>\n\n\n\n<p>Link to FatakPay App: <a href=\"https:\/\/link.ftkp.in\/2uSI\/dkasgvnf\" target=\"_blank\" rel=\"noopener\">https:\/\/link.ftkp.in\/2uSI\/dkasgvnf<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"BlogPosting\",\n  \"headline\": \"What is a Gratuity Calculator?\",\n  \"description\": \"Learn how to calculate gratuity using an online gratuity calculator. FatakPay helps you estimate your retirement benefits and plan your future.\",\n  \"image\": \"https:\/\/fatakpay.com\/blog\/wp-content\/uploads\/2023\/04\/what-is-Gratuity.jpg\",\n  \"datePublished\": \"2023-04-03\",\n  \"dateModified\": \"2023-04-03\",\n  \"mainEntityOfPage\": {\n    \"@type\": \"WebPage\",\n    \"@id\": \"https:\/\/fatakpay.com\/blog\/what-is-a-gratuity-calculator\/\"\n  },\n  \"author\": {\n    \"@type\": \"Organization\",\n    \"name\": \"FatakPay Digital Pvt. Ltd.\",\n    \"url\": \"https:\/\/fatakpay.com\"\n  },\n  \"publisher\": {\n    \"@type\": \"Organization\",\n    \"name\": \"FatakPay Digital Pvt. Ltd.\",\n    \"logo\": {\n      \"@type\": \"ImageObject\",\n      \"url\": \"https:\/\/fatakpay.com\/assets\/images\/logo\/Logo.svg\"\n    }\n  }\n}\n<\/script>","protected":false},"excerpt":{"rendered":"<p>Introduction to Gratuity Calculator: Gratuity refers to the amount that an employer pays his employee, in return for services offered by him to the company. Find out more about Gratuity by reading our blog. We have also included a gratuity calculator for your reference. Before we introduce you to the Gratuity Calculator, let us first<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[260],"tags":[97,95,96,115,113],"class_list":{"0":"post-4435","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-learn-finance","7":"tag-fatakpay","8":"tag-financial-wellness","9":"tag-fintech","10":"tag-mutual-funds","11":"tag-sip"},"_links":{"self":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/comments?post=4435"}],"version-history":[{"count":11,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4435\/revisions"}],"predecessor-version":[{"id":6887,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4435\/revisions\/6887"}],"wp:attachment":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/media?parent=4435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/categories?post=4435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/tags?post=4435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}