What is a Gratuity Calculator?
A simple tool to determine the lump sum amount an employer must pay an employee as a token of gratitude for services rendered upon leaving the job.
Your End-of-Service Benefit
Gratuity is a statutory benefit paid to employees who have rendered at least 5 years of continuous service. It is governed by the Payment of Gratuity Act, 1972. The amount depends on your last drawn salary and the total years you have worked.
The Formula
Gratuity = (Last Drawn Salary * 15 * Years of Service) / 26.
(Salary = Basic + DA)
Rounding of Tenure
If you have worked for more than 6 months in the last year, it is rounded up to the next full year. (e.g., 5 Years 7 Months = 6 Years).
Tax Exemption
Gratuity received up to ₹20 Lakhs is tax-free for government and non-government employees covered under the Act.
Eligibility Check
Our tool automatically alerts you if your tenure is less than 5 years (except in cases of death/disablement).
Auto Rounding
Input your exact years and months of service. We handle the "6-month rounding rule" automatically.
Accrual View
See how your gratuity balance grew year over year based on your final salary input.
Why Choose Our Gratuity Calculator?
Accurate 26-Day Logic
We use the official factor of 26 working days (not 30) to calculate the daily wage, ensuring your result matches HR calculations.
Tax Clarity
We clearly display how much of your gratuity is tax-exempt and how much (if any) exceeds the ₹20 Lakh limit.
Simple Interface
Just enter salary and years. No complex legal jargon or confusing inputs.
Gratuity Calculator
Calculate your payout based on Payment of Gratuity Act, 1972.
Do not include HRA or other allowances.
> 6 months is rounded up to 1 year.
How to Use the Gratuity Calculator
Three easy steps to estimate your leaving benefit.
Enter Salary Details
Input your last drawn Monthly Basic Salary plus Dearness Allowance (DA). Do not include HRA, Special Allowance, or other bonuses.
Input Tenure
Enter the number of years and months you have served the organization continuously. We automatically apply the rounding rule for months.
View Result
Click 'Calculate' to see the total gratuity amount and how much of it is tax-free.
Decoding Gratuity Law
Understand the provisions of the Payment of Gratuity Act, 1972.
| Term | Definition | Impact |
|---|---|---|
| Covered Employees | Organizations with 10+ employees. | Entitled to Act benefits. |
| 15/26 Rule | Wage calculated for 15 days out of 26 working days. | Used to determine per-year benefit. |
| Continuous Service | Uninterrupted service for 5 years. | Mandatory for eligibility (except death). |
| 20 Lakh Limit | Max tax-free limit. | Excess amount is added to taxable income. |
Why is Gratuity Important?
It serves as a reward for loyalty and a financial cushion during career transitions.
Tax Benefits
For government employees, the entire gratuity amount is tax-free. For private sector employees covered under the Act, it is tax-free up to ₹20 Lakhs.
Social Security
Gratuity acts as a lump-sum retirement benefit or a financial buffer if you decide to switch jobs after a long tenure.
Gratuity vs PF vs Pension
How does Gratuity compare to other employee benefits?
Gratuity
Lump sum reward for 5+ years of loyalty.
EPF
Monthly savings for retirement corpus.
Who Should Use Gratuity Calculator?
If you are planning a career move or retirement, this is for you.
Retiring Employees
Employees retiring after a long service need to calculate their exact gratuity amount to plan their retirement corpus investment.
Job Switchers
Professionals resigning after 5 years often forget to factor in gratuity. This tool helps you negotiate exit terms or understand your final settlement.
Gratuity Calculation
See how the 15/26 rule applies in a real scenario.
10 Years Service
Scenario: Basic+DA = ₹50,000 | Tenure = 10 Years
Result: You receive almost ₹2.9 Lakhs as a lump sum benefit.
Trusted by Thousands for 100+ Free Online Tools
Join a growing community of creators, developers, and businesses who rely on our all-in-one tools platform for secure, fast, and free online tools. Your trust is our top priority—no sign-ups, no hidden costs, and complete privacy.
Frequently Asked Questions
Common queries about Gratuity.
Is gratuity taxable?
For government employees, it is fully tax-free. For private sector employees covered under the Payment of Gratuity Act, it is tax-free up to ₹20 Lakhs. Any amount exceeding this limit is taxable.
What if I served 4 years 10 months?
To be eligible for gratuity, you must complete 5 full years of continuous service. 4 years and 10 months (or even 240 days in the 5th year) generally makes you eligible, but 4.5 years does not.
Is gratuity paid in case of death?
Yes, in the unfortunate event of death or disablement, the 5-year service rule is waived. Gratuity is paid to the nominee/heir based on the tenure served.