1. What is Gratuity?

Gratuity is a monetary benefit given by an employer to an employee for services rendered in the company. It's typically calculated based on the employee's last drawn salary and years of service.

2. How Does the Calculator Work?

The calculator uses the gratuity formula:

Where:

• \( Salary \) — Last drawn monthly salary
• \( Years \) — Total years of service
• \( \frac{15}{26} \) — Standard gratuity calculation factor

Explanation: The formula accounts for 15 days wages for each completed year of service, with 26 working days in a month.

3. Importance of Gratuity Calculation

Details: Gratuity is an important part of employee benefits and retirement planning. Accurate calculation ensures employees receive their rightful benefits after long-term service.

4. Using the Calculator

Tips: Enter your last drawn monthly salary and total years of service (can include fractions of years). All values must be valid (salary > 0, years > 0).

5. Frequently Asked Questions (FAQ)

Q1: Who is eligible for gratuity?
A: Typically employees who complete 5+ years of continuous service with an organization are eligible for gratuity.

Q2: Is gratuity taxable?
A: Gratuity up to a certain limit is tax-exempt. The exemption limit varies by country's tax laws.

Q3: Can gratuity be paid before 5 years?
A: In some cases like death or disablement, gratuity may be paid before completing 5 years.

Q4: Does gratuity calculation include bonuses?
A: Usually only basic salary plus dearness allowance are considered for gratuity calculation.

Q5: How often is gratuity paid?
A: Gratuity is typically paid as a lump sum when employment ends (retirement, resignation, or termination).