What is Gratuity Calculator India?

A gratuity calculator estimates the lump-sum amount payable to an employee under the Payment of Gratuity Act, based on their last drawn basic salary plus dearness allowance and their total years of continuous service, for employees who have completed at least five years with an employer covered by the Act.

Gratuity is a statutory lump-sum benefit paid to employees who complete a minimum period of continuous service, typically on resignation, retirement, or termination (with exceptions for death or disablement). This calculator estimates the payable amount using the standard statutory formula.

How to Use This Calculator

Enter your last drawn monthly basic salary + dearness allowance.
Enter your total years (and completed months) of continuous service.
Click Calculate Gratuity to see your estimated payable amount.

How the Calculation Works

Gratuity = (Last Drawn Basic + DA) × 15/26 × Number of Completed Years of Service

26 represents the standard working days in a month used by the statutory formula; a service period of more than 6 months in the final year is generally rounded up to the next full year. The statutory ceiling on tax-exempt gratuity is set in admin settings and can change by government notification.

Worked Example

Last drawn basic + DA of ₹40,000, with 12 completed years of service: Gratuity = ₹40,000 × 15/26 × 12 = ₹2,76,923 (approximately), subject to the statutory ceiling.

Who Should Use This

Employees nearing five years of service, those planning to resign or retire, and HR teams estimating gratuity liability.

Important Considerations

Gratuity eligibility generally requires a minimum of five years of continuous service, with some exceptions. The calculation and ceiling amount are governed by the Payment of Gratuity Act and its amendments — verify current thresholds officially before relying on this figure for a final settlement.

Common Mistakes

Using gross salary instead of basic + DA in the formula significantly overstates the gratuity amount — only basic pay and dearness allowance are used in the statutory calculation.

References

Official source: Ministry of Labour & Employment, Payment of Gratuity Act.

Frequently Asked Questions

Am I eligible for gratuity before 5 years of service?

Generally no — the Payment of Gratuity Act requires a minimum of five years of continuous service, except in cases of death or disablement, where this condition does not apply.

Is gratuity taxable?

Gratuity received is exempt from tax up to a statutory ceiling for employees covered under the Act; amounts above the ceiling are generally taxable. Confirm the current ceiling and your specific situation with a tax professional.