Gratuity Calculator India

Understanding Gratuity in India

Gratuity is a financial benefit provided by employers to employees as a reward for long-term service. It is governed by the Payment of Gratuity Act, 1972 and applies to employees working in establishments with 10 or more employees.

This gratuity calculator helps employees estimate the amount they are eligible to receive based on their last drawn salary and years of service.

What is Gratuity?

Gratuity is a lump sum payment made by an employer to an employee upon resignation, retirement, death, or disability after completing at least five years of continuous service.

Gratuity Calculation Formula

As per the Payment of Gratuity Act, the formula is:

Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26

Here, 15 represents 15 days’ salary for every completed year of service and 26 represents working days in a month.

Eligibility Criteria

• Minimum 5 years of continuous service
• Applicable for companies with 10+ employees
• Paid on retirement, resignation, death, or disability

Taxation of Gratuity

As per current Indian income tax rules, gratuity received by employees covered under the Act is tax-free up to ₹20 lakh. Any amount above that may be taxable.

Example of Gratuity Calculation

Last drawn salary: ₹50,000 per month

Years of service: 7 years 8 months (rounded to 8 years)

Gratuity = (50,000 × 15 × 8) / 26 = ₹2,30,769 approx.

Why Use a Gratuity Calculator?

• Accurate calculation as per Indian law
• Instant results
• Tax-free limit awareness
• Financial planning for retirement

Important Notes

• If service exceeds 6 months in the final year, it is rounded up.
• Basic salary + Dearness Allowance (DA) is considered.
• Private employers may offer higher gratuity benefits.

This gratuity calculator simplifies the process and ensures you know your entitlement before leaving your job.