Calculate gratuity amount based on salary and tenure
Gratuity is a benefit given by an employer to an employee for the services rendered by them during the period of employment. It is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving the job.
As per the Payment of Gratuity Act, 1972, an employee is eligible for gratuity if they have completed at least 5 years of continuous service with the employer. However, in case of death or disability, the 5-year condition is waived.
Gratuity = (15 × Last drawn salary × Years of service) ÷ 26
Where 15 represents 15 days of salary, and 26 represents the number of working days in a month.
Gratuity up to ₹20 lakhs is exempt from income tax. Any amount above this limit is taxable as per the individual's income tax slab.