Gratuity Calculator
What Is Gratuity?
The sum of money that a corporation pays its employee at the end of their service is referred to as gratuity. The gratuity sum, however, is only granted to employees who have worked for the business for five years or longer. The 1972 Payment of Gratuity Act controls it.
If an employee becomes handicapped in an accident or due to a disease, they are eligible to receive their gratuity before the five-year mark. The amount for gratuity calculation in India is primarily based on your most recent income and the number of years you have worked for the company.
Gratuity Calculator FAQs
- How is gratuity calculated in India?
Gratuity is calculated using the formula based on an employee's last drawn salary and years of service.
- What is the gratuity calculation formula in India?
The formula is Gratuity = (Last drawn salary) × (15/26) × (Number of years of service).
- Does the gratuity amount depend on the salary?
Yes, the gratuity amount is based on the last drawn salary and the length of service.
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Where Can One Invest the Lump Sum Gratuity Amount Received?
Here are some options where one can invest the lump sum gratuity amount received:
- Fixed Deposits (FDs):
One can invest in fixed deposits for a fixed tenure and earn a fixed rate of interest. FDs are a safe and secure investment option, and the returns are guaranteed.
- Public Provident Fund (PPF):
PPF is a long-term investment option, which offers tax benefits under section 80C of the Income Tax Act. The funding is secure and is supported by the Indian government.
- Mutual Funds:
Mutual funds, which are administered by qualified fund administrators, are available for investment. Depending on a person's risk tolerance, mutual funds provide a variety of financial choices, including stock funds, debt funds, and hybrid funds.
- National Pension System (NPS):
The Pension Fund Regulatory and Development Council oversees the NPS benefit plan (PFRDA). The returns are dependent on the success of the market, and it is a long-term investment choice.
- Real Estate:
One can invest in real estate, which is a long-term investment option. The investment can generate regular rental income and capital appreciation over the long term.
- Stocks:
Stocks that are traded on the stock market can be purchased for investment. Stock investing is a high-risk, high-reward strategy that calls for knowledge and study.
