Gratuity Calculator

What is Gratuity Calculator?

The Gratuity Calculator estimates the lump-sum gratuity amount payable to an employee upon resignation, retirement, or superannuation after completing at least 5 years of continuous service, as per the Payment of Gratuity Act, 1972.

How to Calculate Gratuity

1. Enter your last drawn Basic Salary + DA (monthly)
2. Enter your total years of continuous service
3. Click Calculate to see your gratuity amount and tax-free limit

How Gratuity Calculator is Calculated

Gratuity = Last Drawn Salary × 15 × Years of Service / 26, where Last Drawn Salary = Basic + DA. The factor 15/26 assumes 15 days' wages for each completed year, and 26 working days per month.

Worked Example

Last drawn salary (Basic + DA) = ₹60,000/month, 12 years of service: Gratuity = 60,000 × 15 × 12 / 26 = ₹4,15,385. Tax-free limit is ₹20,00,000 for government employees.

Common Use Cases

• Retirement benefit estimation
• Job switch financial planning
• Comparing offers with different service tenures
• Understanding CTC gratuity component

Common Mistakes to Avoid

• Including HRA, conveyance, or special allowances in the calculation — only Basic Salary + Dearness Allowance counts for gratuity.
• Counting service less than 5 years — employees must complete at least 5 continuous years to be eligible (4 years 240 days in some cases).
• Not rounding the years correctly — service of 6 months or more in the last year is rounded up to the next full year.
• Assuming gratuity is fully tax-free — for private sector employees, only up to ₹20 lakhs is tax-exempt. Any excess is taxable.

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Why This Calculator Matters

Gratuity is a statutory benefit payable to employees who complete 5+ years of continuous service. Under the Payment of Gratuity Act, 1972, the maximum limit is ₹25 lakh (increased from ₹20L in 2024). For government employees, there is no upper limit. Gratuity is exempt from income tax up to ₹25 lakh for private sector employees.

What You Get

• Calculate gratuity for private and government employees
• Factor in last drawn salary and years of service
• Tax exemption calculation
• Compare Act-covered vs non-covered employees
• Include DA in basic salary calculation
• Partial year rounding rules

How It's Calculated

Gratuity = (Basic + DA) × 15/26 × Years of Service. For non-Act employees: (Basic + DA) × 15/30 × Years. Maximum: ₹25,00,000 for private sector.

Real-World Example

Basic + DA = ₹80,000/month, Service = 12 years. Gratuity = 80,000 × 15/26 × 12 = ₹5,53,846. Tax-exempt: full amount (under ₹25L limit).

At a Glance

Gratuity amounts by salary and service years

Practical Advice

• 💡 Service of 4 years and 240 days counts as 5 years for gratuity eligibility.
• 💡 Gratuity formula uses 15 days salary per year — but divides by 26 (working days), not 30.
• 💡 Government employees use a different formula: salary × years × 15/26 with no cap.
• 💡 Gratuity received is tax-exempt up to ₹25 lakh for non-government employees.
• 💡 Include Dearness Allowance in basic salary for gratuity calculation.

Who Should Use This?

Employees planning resignation or retirement, HR managers calculating separation benefits, and finance teams budgeting for gratuity provisions.