If you are a person who is planning for retirement, making an estimate of your gratuity is essential. It can help you make investment plans which can support your post-retirement expenses and lead a worry-free life in your golden years.
Furthermore, you should also learn how to use a gratuity calculator in order to get an accurate estimate of your receivable corpus. Let’s dive in.
Before you learn about the gratuity calculator in detail, you need to have a clear idea of gratuity.
Gratuity is a sum of money which is payable by employers to their employees after retirement. It is payable to individuals who have worked five years or more in an organisation and was brought into effect in 1972 by the Payment of Gratuity Act.
This sum is calculated based on an employee's last drawn salary and the years of service in the company. Now, under certain special circumstances, individuals are allowed to receive their gratuity before 5 years.
They can be eligible for it if they get disabled due to any disease or accident. Furthermore, in case of their death, the gratuity sum is paid to their nominees.
As per the latest gratuity rule, employees are eligible to receive 15 days' worth of salary for the number of years of their service. Additionally, they can receive a maximum gratuity amount of ₹20 lakh, above which it will be considered ex-gratia.
Apart from this, if employees have worked for more than 6 months in their last year of service, it is rounded off to the nearest figure.
Now, there are some gratuity eligibility criteria which individuals must meet in order to avail of this corpus. They are as follows:
A gratuity calculator is an application which helps estimate your receivable gratuity after retirement. It is an online tool which takes into account your monthly salary (basic + DA) and years of service to generate the total payable gratuity amount within a matter of seconds.
Now, this calculator works on the gratuity formula:
Gratuity = n*b*15 / 26, where:
n = tenure completed in the organisation
b = last drawn salary (basic) + dearness allowance/sales commission
Let’s take an example for better understanding.
Suppose you had a salary of ₹95,000 with an employment tenure of 12 years and 9 months. Thus, applying the formula:
Gratuity = 13 X 95000 X 15 / 26
To use Samco’s gratuity calculator online, follow the steps given below:
Step 1: Navigate to Samco’s gratuity calculator page.
Step 2: Enter your monthly salary (Basic + dearness allowance).
Step 3: Provide your years of service.
The system will calculate and display your total payable gratuity amount on the screen.
The benefits of using a gratuity calculator are as follows:
You now have a clear idea of how to use the gratuity calculator.
But have you thought of what to do with your gratuity amount?
You should consider investing a part of the corpus in securities which can generate regular income. In this regard, the New-Gen Samco app is all you need. It’s Stock SIP feature allows you to allocate a set amount each month to your favourite stocks.
What’s more, you can follow Samco Stock Ratings to pick only high-qulaity stocks and create a reliable passive income source.
Download the Samco app today and become financially independent in your post-retirement years!