How To Calculate Gratuity In India Online?

Whether you are a homemaker or a working professional. You must be familiar with the word ‘Gratuity’ during employee pay structure communication. Still, many people lack the actual significance, its benefit, why its offered, and many things regarding gratuity. At the same time, how it is distributed & how to calculate gratuity in india online?

What Is Gratuity?

Gratuity is a kind of additional compensation offered to an employee while serving for a minimum of five years in an organization. An employer offers gratuities to employees under Section 10(10A) of the Income Tax Act. Employers pay gratuity to its employee on their own or through insurance company plan support. In case of an employee’s demise, the concerned employee’s family gets the gratuity amount. An enterprise including manufacturing, business, sales, healthcare, or any other industry consisting minimum of 10 employees becomes eligible for Gratuity offering at their place. Furthermore, this amount is entirely paid by an employer, unlike the provident fund which takes an employee’s contribution also.

How Does An Employee Become Eligible For Gratuity?

Although gratuity is offered by the organization from its own plan. But an employee couldn’t withdraw or ask for the same while not meeting the below conditions.

When an employee gets retirement from work.
When the employee gets superannuation.
When an employee dies due to any circumstance. (when gratuity is offered to the employee’s family)
When an employee resigns after working for 5 or more years in an organization.

Gratuity Computation Process

Although, the significance of gratuity becomes easily understandable from its definition. Still, the employee gratuity calculator functioning is provided on different platforms to easily compute for a common person. Therefore, here is the gratuity computation which an employee’s pay structure provides.

The gratuity amount depends upon the no. of years an employee serves in an organization. At the same time, the amount of the last salary an employee withdraws from the concerned workplace. Therefore, the general formula for gratuity calculation is-

Gratuity= No.of employee served years*Last Basic Pay + Dearness Allowance *15/26

Since an organization doesn’t offer the gratuity under the gratuity act. In case, an organization doesn’t come under the gratuity act, the employee still can get gratuity as a tip. This is provided with respect to the half-month month salary of the last year offered for the workplace.

Gratuity=(Last Withdrawn Salary*No. of served years)/30

Since an organization also offers gratuity in case of an employee’s demise. Thus, in this case, gratuity varies depending upon an employee’s service term. Therefore, in case an organization comes under the gratuity act. And if an employee demise after a certain period of service. Then, his gratuity can vary in the following ways.

1. If an employee covers his service for less than a year. Then his gratuity amount calculation can be as;

Gratuity Amount=Basic Salary*2;

2. If an employee serves between one to five years in an organization. Then his gratuity calculation formula can be as;

Gratuity Amount=Basic Salary*6;

3. If an employee serves for more than five years & less than 11 years, Then his gratuity amount calculation formula can be;

Gratuity Amount=Basic Salary*12;

4. When an employee serves 11-20 years in an organization. Then, his gratuity formula can be;

Gratuity Amount=Basic Pay * 20;

5. When an employee works in an organization for more than 20 years. Then his gratuity amount calculates as;

Gratuity Amount=½*Basic pay after every six months served. (this is included at a maximum of 33 times for the gratuity amount).

So, if you look for a India gratuity calculation online, you can get results basis on the above-mentioned conditions. Along with

Tax Pay On Gratuity Amount

While computing the gratuity through the gratuity calculation online in india, the final amount can be dependable on the tax which he is supposed to pay. Therefore, here is the different taxation process that implements for every employee category.

A government employee working in a central, state, or regional department gets exemption in tax from the gratuity amount.
A non-government employee working in any organization which comes under the gratuity act is supposed to pay the tax. Although he gets tax exemption in case he receives the gratuity under the non-gratuity act. Or the exemption with respect to half month salary of the last month.

Why Gratuity Is Structured For Employees?

An employee gets the salary as per his skills & dedication towards the work. Still, gratuity is a kind of compensation that makes an employee feel secure & satisfied at the place where he serves. An employee becomes more encouraged & stable to serve in an enterprise while accomplishing his long-term service. At the same time, it benefits the organization to improve its expected goals by making long-term relations with its employees.

What Are The Rules Applicable For Gratuity?

One needs to follow the simple steps mentioned below for availing of the gratuity payment.

An employee can enroll for the gratuity withdrawal process which he owns through a simple application fulfillment & send it to the employer.
As an employee can calculate or initially feels aware of the gratuity process. An employer acknowledges him for his request. At the same time, he responds to the employee's inquiry with desired gratuity amount while going through the necessary eligibility conditions.
An employer fulfills the gratuity transfer process within 30 days to the concerned employee.

What Is Gratuity Forfeiture?

Gratuity Forfeiture is a condition when the employer fines the employee as per the right provided under the Payment of Gratuity Act 1972. As per this act, if an employee leaves the service before five-year completion at the workplace or leaves the job because of any misbehaving or misconduct at the workplace. Thus, an employer can take strict actions or fine the employee to avoid any misuse of the gratuity process.

How Does HRMS Integrates With Gratuity?

An enterprise doesn’t focus on calculating the usual functions. Instead, it looks for better alternatives to add to regular work to make it more easy & effective. Therefore, it’s not necessary to add on the gratuity or other pay structure in a separate software when HRMS software provides the same support. Thus, the HRMS integrated with the payroll module can include the gratuity calculation for every employee. The enterprise uses common software to collaborate with regular employees and can focus on regular & better-organized management through a single platform.

Therefore, here are the listed benefits of HRMS software for payroll structure including gratuity & other pay-structure components.

Integration in the payroll module which makes it easily trackable for every employee category.
One single platform to perform other policies along with payroll gratuity calculation.
Separate & crystal clear understanding of the salary component through the module present in HRMS software.
Consistent interaction with every updation or other amendment in the policy/process which engage every employee in checking or computing their gratuity amount process.

Final Words

If you look for a gratuity calculator online India process, you must go through the associated features & integration within the salary. Although, the gratuity process is common for every organization. But the amount varies depending upon the organization’s pay structure, its collaboration in the gratuity plan with the insurance company, and many other factors. At the same time, it differs with respect to employee work approach & commitments to the organization. One must go through the proper inclusion process in the salary to get the proper benefits.