Gratuity Calculator

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Gratuity Calculator

Gratuity Calculator

Gratuity is a benefit provided to employees by their employers as a token of appreciation for their services. It is a lump sum amount paid by the employer to the employee at the time of retirement or resignation. The gratuity amount is calculated based on the employee’s last drawn salary and the number of years of service.

To calculate the gratuity amount, the following formula is used:

Gratuity = (Last drawn salary * 15/26) * (Number of completed years of service)

Here, the 15/26 fraction represents 15 working days out of a total of 26 working days in a month.

Let’s take an example to understand how to calculate gratuity using this formula:

Suppose an employee has worked for a company for 20 years and has retired with a last-drawn salary of Rs. 50,000. To calculate the gratuity amount, we will use the formula mentioned above.

Gratuity = (Last drawn salary * 15/26) * (Number of completed years of service)
Gratuity = (50,000 * 15/26) * 20
Gratuity = Rs. 1,44,231.00

Therefore, the gratuity amount for the employee is Rs. 1,44,231.00.

It’s important to note that the maximum amount of gratuity payable under the Payment of Gratuity Act, 1972 is Rs. 20 lakhs.

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