Gratuity Calculator: If the basic salary is ₹65,000, then how much gratuity will you get after 7 years of service, know here...

Gratuity is an important financial security option for employed people in India, recognizing their years of hard work, loyalty, and dedication. Whether you work in the private sector or the government, if you have completed five consecutive years at your organization, you are eligible to receive gratuity. This is a kind of "loyalty bonus" that an employer provides to its employee in return for their long service. If your basic salary at a company is ₹65,000, then after seven years, you will receive a gratuity worth lakhs.

What is gratuity, and why is it important?
In simple terms, gratuity is the financial support provided to an employee when they leave their job or retire. This not only provides financial security for the employee's future but also serves as proof of their work. In India, this facility is provided under the "Payment of Gratuity Act, 1972," which applies to companies.

Gratuity Rules for 5 Years of Service
According to the law, an employee receives gratuity benefits if they have worked continuously for five years or more. If a person leaves a job before completing five years, they are not entitled to gratuity. However, in certain circumstances, such as the employee's death or permanent disability, this condition is not applicable, and the amount can be given to their family.

How the money is calculated
Suppose you work for a company for seven consecutive years and your last salary is ₹65,000 (basic + DA). In such a situation, according to the calculation of gratuity, you will receive a payment of approximately ₹2,62,500. This amount is essentially a reward for your service and loyalty, paid in a lump sum upon retirement or leaving the job. Gratuity not only provides financial security but also honors your hard work. It proves to be a reliable financial support for long-term employees.

Full Calculation of Gratuity
Last salary refers to the sum of basic pay and DA (Dearness Allowance). The maximum limit for gratuity is currently set at ₹20 lakh. For example, if an employee's basic salary is ₹65,000 and DA is zero, then according to the formula, gratuity for 7 years of service is ₹2,62,500. Similarly, if the DA is 20% or the total salary, and the service is ₹65,000, the gratuity comes to ₹3,75,000.

How is gratuity received?
Gratuity funds are usually disbursed when an employee leaves the job, retires, or retires for some reason. However, many companies now offer online gratuity calculators, allowing employees to know the exact amount they are entitled to in advance.

Tax Rules on Gratuity
Tax rules related to gratuity in India are completely transparent. Government employees receive their entire gratuity tax-free, while private sector employees are exempted only up to a certain limit. If your company is covered under the Payment of Gratuity Act, 1972, you will be eligible for tax exemption on the lower of the three amounts: ₹20 lakh, the formula-derived amount, or the actual gratuity. Any amount above this amount is subject to tax, which is determined by adding it to your other income. This rule helps employees with tax planning and maintains transparency. (Note: This news is based on general information, so the gratuity amount may be less.)

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.