Gratuity Calculator

What is gratuity?

Gratuity is a lump sum payment made by an employer to an employee when they leave after completing at least 5 years of continuous service. It is governed by the Payment of Gratuity Act, 1972 in India (for establishments with 10 or more employees). Gratuity is paid on superannuation, retirement, resignation, or death. It is a form of gratitude for the employee's service and is calculated based on the last drawn salary (Basic + Dearness Allowance) and the number of completed years of service. There is a cap on the maximum gratuity (e.g. ₹20 lakh as per current rules); amounts above that may be paid but tax treatment may differ. This calculator helps you estimate your gratuity so you can plan your post-employment finances and know what to expect when you change jobs or retire.

Gratuity received from an employer covered under the Act is tax-free up to the specified limit (₹20 lakh overall). Beyond that, it may be taxable. Government employees have different rules. Use this tool for a quick estimate; for exact eligibility and tax, refer to the Act and a qualified CA.

Formula

Gratuity = (Last drawn salary × 15 / 26) × Completed years of service. Here, last drawn salary = Basic + DA (Dearness Allowance). The factor 15/26 comes from the Act (15 days wages for each year; 26 working days per month). Only completed years of service count (e.g. 15 years 11 months = 15 years). The amount is subject to a maximum cap (currently ₹20 lakh). So if the formula gives more than ₹20 lakh, gratuity is capped at ₹20 lakh. The calculator above applies this formula and the cap. For service of less than 5 years, gratuity is generally not payable (except in case of death or disablement as per rules).

Example calculation

Your last drawn Basic + DA is ₹75,000 and you have completed 15 years of service. Gratuity = (75,000 × 15/26) × 15 = 43,269 × 15 = ₹6,49,038 (approximately). This is below the ₹20 lakh cap, so you would receive about ₹6.49 lakh as gratuity. If your last salary were ₹2,00,000 and you had 20 years of service, the formula would give (2,00,000 × 15/26) × 20 ≈ ₹23 lakh, but it would be capped at ₹20 lakh. Use the calculator above with your last salary and years of service to get your estimate. Remember that you need 5 or more completed years to be eligible.

Benefits of Using This Calculator

A gratuity calculator helps you estimate the lump sum you will receive when you leave your job after 5 or more years. You can plan your post-employment budget, repayment of loans, or investments. It also helps you see how a higher last salary or more years of service increase gratuity, and where the ₹20 lakh cap applies. Use it before resigning or retiring to set expectations and to discuss with your employer if needed. The tool is free and requires no sign-up.

Knowing your gratuity in advance is useful for tax planning too—gratuity is tax-free up to the limit, so you can plan other income and investments accordingly. For exact eligibility and tax treatment, refer to the Payment of Gratuity Act and a CA.

How to Use This Calculator

Enter your last drawn salary (Basic + DA) in rupees per month—this is the salary you would be entitled to at the time of leaving. Then enter your completed years of service (only full years count). The calculator shows your gratuity amount and applies the ₹20 lakh cap if applicable. If you have less than 5 years of service, the result will be zero (gratuity not payable under the Act in normal cases). Use it when planning a job change or retirement to know how much gratuity you will get. For employers covered under the Act, the formula is standard; for others, check your company policy.

This calculator is for estimation only. Actual gratuity may depend on your employer's coverage under the Act, any company-specific policy, and the exact definition of salary (e.g. whether commission is included). For government employees, different rules may apply. Consult your HR or a CA for exact figures.

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