Gratuity Calculator
Calculate your retirement benefit
Enter if applicable
What is Gratuity?
Gratuity is a terminal benefit paid by an employer to an employee as a token of appreciation for services rendered to the organization. Under the Payment of Gratuity Act, 1972, gratuity is payable to employees who have completed 5 or more years of continuous service. The formula for calculating gratuity is: (Last drawn salary × 15 × Years of service) ÷ 26, where "Last drawn salary" includes basic salary plus dearness allowance. Gratuity is tax-free up to ₹20 lakh under the current tax rules.
Why Use This Gratuity Calculator?
Understanding your gratuity entitlement is crucial for retirement and career planning. Many employees underestimate this benefit, which can amount to several lakhs of rupees after a long tenure. This calculator uses the exact formula prescribed by the Payment of Gratuity Act, handles service year rounding rules (6 months or more rounds up), and clearly shows whether you meet the 5-year eligibility threshold. It also accounts for dearness allowance, which many online calculators overlook.
How to Use This Calculator
Step 1: Enter your basic salary (last drawn). Step 2: Enter your dearness allowance (DA) if applicable — enter 0 if not. Step 3: Enter your total years and months of service. Step 4: Click "Calculate" to see your estimated gratuity amount, eligibility status, and the complete calculation breakdown. You can download a PDF report or share the results on WhatsApp.
Key Terms Explained
Payment of Gratuity Act: Central legislation mandating gratuity for establishments with 10+ employees. Eligibility: Minimum 5 years of continuous service (relaxed in case of death or disability). Service Rounding: If months of service are 6 or more, the year is rounded up (e.g., 4 years 7 months = 5 years). Tax Exemption: Gratuity up to ₹20 lakh is fully exempt from income tax. The 15/26 Formula: 15 days wages for each year of service, calculated on a 26-day working month basis.