Gratuity Calculator is an online tool for investment calculation, programmed to estimate the amount that is received by an employee at the time his retirement or by his legal beneficiary in the event of employee death. This calculator computes the amount of Gratuity Pay with respect to the input values of basic pay as last drawn monthly salary as on date is taken into account, DA - dearness allowance, Number of years and months served, the gratuity coverage of Indian Act 1972 and the commission on salary.
What is Gratuity?
The term Gratuity is popular in India and defined as the amount payable to any employee only who serves for a minimum period of 5 years at a stretch with his employer. Gratuity Pay can be received by an employee at the time of his retirement or by his legal beneficiary in the event of death of the employee. Gratuity is often considered as an income and the employee who received gratuity is liable to pay the tax on the same. Gratuity is taxable under the head salary and gratuity received by the legal beneficiary is taxable under the head income from other sources. the tax is exempted for the entire amount in the event of government employee death cum retirement gratuity and nothing is hence taxable under the head salary.
The employees are divided in to three categories such as Govt. Employees of India, Employees covered under the payment of Gratuity Act 1972 and other employees, for the purpose of Tax exemption according to the Indian Act 1961 under sec 10(10). The gratuity received on retirement or employment termination, in excess the sum of maximum limit is included in the gross salary of the employee for the purpose of taxation. In India, the employees covered under the Gratuity Act 1972, who receive Gratuity, have been given exemption for the minimum limit of the receivable amount. The employee who has served total period with less than 5 year will not be included in Gratuity Pay. The amount is calculated as per the last average salary drawn and the number of years served by an employee. When it comes to online calculation, this Gratuity calculator is a specially designed tool to calculate the Gratuity and it is applicable only for Indian employees who are eligible to receive Gratuity Pay.