Gratuity Calculator

What is Gratuity Calculator?

A gratuity calculator computes the lump-sum payment an employee receives from their employer upon completing 5 or more years of continuous service in India. Gratuity is governed by the Payment of Gratuity Act, 1972, and is calculated using the formula: (15 × last drawn salary × years of service) / 26. The 'salary' includes basic pay plus dearness allowance. The maximum gratuity payable is ₹20 lakh (tax-free up to this limit). Understanding your gratuity entitlement helps with retirement planning and evaluating the true value of long-term employment.

How It Works

Enter your last drawn monthly salary (basic + DA) and total years of service. The tool applies the formula: Gratuity = (15 × monthly salary × completed years) / 26. The divisor of 26 represents working days in a month, and the multiplier of 15 represents half a month's salary for each year served. Service over 6 months in the final year rounds up to a full year. The tool also shows eligibility status (minimum 5 years required) and the tax-free limit applicability.

Common Use Cases

• •Estimating gratuity entitlement when planning to resign or retire from a long-term position
• •Calculating the financial benefit of staying with an employer to complete 5 years for eligibility
• •Verifying employer's gratuity calculation during separation or retirement processing
• •Including gratuity in total compensation analysis when comparing job offers
• •Planning retirement corpus by factoring in expected gratuity from current employment
• •Understanding the tax-free limit and planning around the ₹20 lakh maximum exemption

Frequently Asked Questions

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