Gratuity Calculator
by Zoho PayrollFree Online Gratuity Calculator
A user-friendly tool to compute your gratuity amount for free easily.
Disclaimer: Zoho has taken great care and has made every attempt to ensure that the information obtained from the tool is accurate. However, Zoho is not responsible for any errors or omissions and provides no guarantee or warranty on the correctness of the results obtained from the tool. By using this tool you agree not to hold Zoho liable for any issues that arise from incorrect results obtained.
Frequently Asked Questions
What is gratuity?
Gratuity is a sum of money that is given by an employer to an employee in honour of their service to the organisation. Organisations with 10 or more employees are required to pay gratuity to their employees once they've completed 5 years of service in the organisation. Gratuity is also given to the employee or their family in specific cases such as:
- Sudden death or disability
- Retirement
- Superannuation
What is Zoho Payroll Gratuity Calculator?
The Zoho Payroll Gratuity Calculator is used to calculate the sum of money a person will receive as gratuity, based on how long they have worked in an organisation. It factors in salary components such as Basic Pay, Dearness Allowance, and service duration.
Formula used to calculate gratuity for employees covered under the Gratuity Act of 1972:
Gratuity Amount = 15 days Average Pay * Tenure of Working
Average Pay = ((Last drawn Basic + DA) / 26 working days of a month) * 15 days
Formula used to calculate gratuity for employees not covered under the Gratuity Act of 1972:
Gratuity Amount = 15 days Average Pay * Tenure of Working
Average Pay = ((Last drawn Basic + DA) / 30 working days of a month) * 15 days
Who is eligible for gratuity?
Employees will be eligible for gratuity if:
- They are resigning after having completed 5 or more years in a single organisation;
- They have reached the retirement age;
- They have suffered disability during/due to work; or
- They are eligible for superannuation in an organisation.
How does Zoho Payroll process gratuity?
In Zoho Payroll, gratuity will be calculated automatically during termination if the employee has completed 5 or more years in the organisation. It will be calculated based on this formula:
Gratuity Amount = 15 days Average Pay * Tenure of Working
Average Pay = ((Last drawn Basic + DA) / 26 working days of a month) * 15 days
The calculated gratuity amount will be populated automatically in the employee's termination payroll. You can override the amount, if needed.
What are the taxes on gratuity?
Taxation on gratuity varies based on the type of employee.
- For a Government employee, the entire gratuity amount is exempted from tax.
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For an employee in the private sector who is covered under the Gratuity Act of 1972, the least of the following is exempted from tax:
- Total amount of gratuity received
- ₹20 Lakhs
- 15 days salary (based on the last drawn salary) for every completed year of service. More than 6 months of service in a year, with 26 days of work per month, counts as a year for this calculation.
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For an employee in the private sector who is not covered under the Gratuity Act of 1972, the least of the following is exempted from tax:
- Total amount of gratuity received
- ₹20 Lakhs
- Half-month salary (based on the last 10 months salary) for every completed year of service.
Is there any limit on the gratuity amount?
The statutory limit imposed by the Government on gratuity is ₹20 lakhs.
How long will it take to release my gratuity?
Organisations are required to disburse an employee's gratuity within 30 days of the full and final settlement date. If there is any delay in releasing the gratuity, the employer has to pay interest (8% per annum. if the payment is made within four weeks and 10% per annum if it is delayed longer) on the gratuity amount from the due date until it is released.
