Gratuity Calculator
Gratuity is more than just a farewell bonus—it’s a reward for your loyal service. Governed by the Payment of Gratuity Act, 1972, it offers financial support during retirement, resignation or any unforeseen events. Use our gratuity calculator to instantly know what you're entitled to. It’s quick, simple and helps you plan ahead!
Gratuity Calculator
Total Gratuity payable
Gratuity Calculation Formula
The gratuity amount can be calculated manually using the following formula. The calculation method depends on whether the employee’s organization is covered by the Gratuity Act or not:
Gratuity = (Basic of last drawn salary + Dearness Allowance (DA)) × Years of Service × 15 ÷ 26
Explanation:
- Basic of last drawn salary + DA: Take your last basic salary along with any dearness allowance (DA) you receive.
- Years of Service: Consider the total number of full years you’ve worked in the organization. If you've worked more than 6 months in a particular year, that year can be rounded up to the next full year.
- Multiply by 15: This factor is used as per the Gratuity Act.
- Divide by 26: The number 26 represents the number of working days in a month, which is used to calculate the gratuity amount.
This formula will give you the total gratuity amount you're eligible to receive based on your service and salary.
What is Gratuity?
Gratuity is a monetary benefit provided by an employer to an employee as a gesture of appreciation for their long-term service. It serves as a form of financial security, especially at the time of retirement or resignation, and is a part of an employee’s overall retirement benefits, alongside pensions and provident fund contributions.
Under the Payment of Gratuity Act, 1972, gratuity is legally mandatory for employers with 10 or more employees.
How to Use a Gratuity Calculator
- Enter Your Last Drawn Salary
Typically, this is the average of your basic salary and dearness allowance (DA). - Add Total Years of Service
This is the total number of years you’ve worked in the organization. - Select Gratuity Act Coverage
Some calculators may ask if your employer is covered under the Gratuity Act for a more accurate result. - Click Calculate
The calculator will provide an instant estimate based on your inputs.
Benefits of Using a Gratuity Calculator
- Instant Results: Quickly calculates your gratuity amount based on inputs like salary and years of service.
- Saves Time & Effort: Eliminates the need for manual calculations and reduces the risk of errors.
- Financial Planning: Helps you understand your post-employment benefits and plan future finances more effectively.
- Tax Insights: Some calculators factor in applicable tax rules, showing your net receivable after deductions.
Frequently Asked Questions
As per the latest rules, the maximum tax-free gratuity amount an employee can receive is ₹20 lakhs. Any amount above this may be taxed as per the applicable income tax slab.
Yes, but only under specific conditions. An employer may withhold or forfeit gratuity partially or fully if the employee has been dismissed for willful misconduct, fraud or causing damage to company property.
If an organization shuts down but has 10 or more employees during its operation, it is still liable to pay gratuity to eligible employees, unless it is legally declared bankrupt and unable to meet financial obligations.
Yes, gratuity is applicable to both public and private sector employees, provided the organization falls under the Gratuity Act and the employee fulfills the eligibility conditions.
Legally, an employer must pay the gratuity amount within 30 days from the date it becomes due (usually the last working day). Delays may attract interest penalties under the Gratuity Act.
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