Gratuity Calculator

Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered to the organization for a continuous period of 5 years or more.

Let's Find Your Gratuity

Last Drawn Monthly Salary (Basic + DA)

Years of Service

If your final year has over 6 months, round up! (e.g., 10 years 8 months = 11 years).

Is your employer covered under the Gratuity Act?

Yes No

Your Estimated Gratuity

₹0

Your calculation will appear here!

Ever wondered about that special “thank you” bonus you might receive from your employer for your dedicated service?

That’s gratuity!

It’s a fantastic benefit, but figuring out how much you’re owed can feel like solving a complex puzzle. Don’t worry, we’re here to make it simple, clear, and even a little exciting. This page, along with our easy-to-use calculator, will help you unlock the mystery of your gratuity amount, so you can plan for your future with confidence.

How to Use Our Gratuity Calculator?

It’s as easy as 1-2-3!

Add your salary: Input your last drawn Basic Salary plus Dearness Allowance (DA). Don't include other allowances unless they are explicitly part of your basic pay for gratuity purposes.
Then your Service Years: Enter your total completed years of service. Remember, if your last year of service is 6 months or more, round it up! (e.g., 9 years and 7 months becomes 10 years).
Choose your Employer's Status: Select whether your employer is covered under the Payment of Gratuity Act, 1972. This changes the calculation method.
Hit "Calculate": Watch the magic happen! Your estimated gratuity amount will appear instantly.

Formula used for calculating Gratuity

Gratuity is typically calculated based on your last drawn salary and your years of service. The formula differs slightly depending on whether your employer is covered under the Payment of Gratuity Act, 1972.

For Employees covered under the Payment of Gratuity Act, 1972:

This is the most common scenario. The Act defines a specific way to calculate your gratuity, ensuring you receive a fair amount for your service.

$G r a t u i t y = (Last Drawn Salary (Basic + DA) \times 15 days \times Number of Years of Service) /26$

Let’s break down this formula into plain English:

Last Drawn Salary (Basic + DA): This isn't your full take-home pay. It specifically refers to your last drawn Basic Salary plus your Dearness Allowance (DA), if applicable. Think of it as the core components of your salary that are considered for this calculation.
15 days: The Act specifies that for every completed year of service, you're entitled to 15 days' worth of salary.
Number of Years of Service: This counts your total completed years of service. Here's a cool detail: if you've completed more than six months in your final year, that year is rounded up to a full year for gratuity calculation! So, 4 years and 7 months counts as 5 years.
26: This represents the number of working days in a month (excluding 4 Sundays). It's used to convert your monthly salary into a daily rate for the 15 days.

For Employees NOT covered under the Payment of Gratuity Act, 1972:

Some organizations might not fall under the Act, but they still choose to pay gratuity. In such cases, the calculation is usually based on a slightly different approach, often using 15 days’ salary for each year of service, but divided by 30 (total days in a month) instead of 26.

$G r a t u i t y = (Last Drawn Salary (Basic + DA) \times 15 days \times Number of Years of Service) /30$

An Example: Priya's Gratuity Calculation

Let’s meet Priya! She’s been a dedicated employee, and she’s curious about her gratuity.

Using the formula for covered employees:

$G r a t u i t y = (₹50, 000 \times 15 \times 11) /26$

$G r a t u i t y = (₹82, 50, 000) /26$

$G r a t u i t y = ₹3, 17, 307.69$

Priya can expect a gratuity of approximately ₹3,17,307.69! This example shows how your years of hard work translate into a tangible financial reward.

Frequently Asked Questions (FAQs) around Gratuity

Here are some common questions about Gratuity

Who is eligible for gratuity?

Generally, employees who have completed at least 5 years of continuous service with an employer are eligible for gratuity upon resignation, retirement, superannuation, or termination. In case of death or disablement, the 5-year rule does not apply.

Is gratuity taxable?

For government employees, gratuity is fully exempt from income tax. For non-government employees, there are specific exemption limits. Gratuity received by an employee is exempt up to the least of: (i) Actual gratuity received; (ii) ₹20 Lakh (as per the current limit); or (iii) A calculated amount based on salary and service years (as per the Act).

What if I complete 4 years and 8 months of service? Am I eligible?

Yes! Under the Payment of Gratuity Act, if your service in the final year is 6 months or more, it’s rounded up to a full year for gratuity calculation. So, 4 years and 8 months would be considered 5 years for eligibility.

Can my employer refuse to pay gratuity?

An employer cannot refuse to pay gratuity if an employee meets the eligibility criteria as per the Payment of Gratuity Act, 1972. However, gratuity can be forfeited in cases of termination due to willful omission or negligence causing damage to the employer’s property, or riotous/disorderly conduct.

What is the maximum gratuity amount I can receive?

The maximum gratuity amount an employee can receive under the Payment of Gratuity Act, 1972, is currently capped at ₹20 Lakh.

Disclaimer: The above content is for informational purposes only and is not meant to be taken as investment, financial, or any other kind of advice. This is not a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments.