Gratuity Calculator
Use this free gratuity calculator to estimate how much gratuity you may receive based on your last drawn basic salary, dearness allowance, and total years of service. It follows the common Indian gratuity formulas and applies the Rs. 20 lakh maximum limit.
What is Gratuity?
Gratuity is a lump-sum amount paid by an employer to an employee as a reward for long and continuous service. In India, gratuity is commonly paid when an employee resigns, retires, or leaves after completing the required period of service.
This calculator is mainly for India users. Global visitors can also use it to understand the logic, but local employment rules may be different in their country.
Gratuity Calculation Formula
The salary used for gratuity is usually:
- Salary = Basic Salary + Dearness Allowance (DA)
If your extra months of service are 6 or more, the service period is rounded up by one year. If it is less than 6 months, the completed year count stays the same.
- If covered under the Gratuity Act: Gratuity = (Salary x 15 x Years considered) / 26
- If not covered under the Gratuity Act: Gratuity = (Salary x 15 x Years considered) / 30
- Maximum gratuity used in this calculator: Rs. 20,00,000
Example Calculation
Suppose your last drawn basic salary is Rs. 50,000 per month and DA is Rs. 10,000. Your total service is 7 years and 8 months, and you are covered under the Gratuity Act.
- Salary used = Rs. 60,000
- Months are 8, so years considered = 8
- Gratuity = (60,000 x 15 x 8) / 26 = Rs. 2,76,923.08
This gives an estimated gratuity amount of about Rs. 2.77 lakh.
Gratuity Eligibility Rules
In most cases, gratuity becomes payable after at least 5 years of continuous service with the employer. This is commonly called the 5-year rule. If your service is below 5 years, this calculator shows that you are not eligible for gratuity.
There can be exceptions in special cases such as death or disability, but those cases depend on the applicable legal provisions and employer policy.
Maximum Gratuity Limit
This calculator applies a maximum gratuity limit of ₹20,00,000. If your calculated amount is higher than this limit, the final result is capped and the page clearly shows the cap message.
Helpful Calculators
Use these related tools for salary and tax planning:
- Income Tax Calculator for checking possible tax on your salary or retirement-related income.
- Salary Calculator link can be added here once the page is published.
- HRA Calculator link can be added here once the page is published.
- EPF Calculator link can be added here once the page is published.
FAQ
Q1. What is gratuity?
Gratuity is a one-time payment made by an employer to an employee for long service. It is usually paid when the employee leaves the organization after meeting service conditions.
Q2. Who is eligible for gratuity?
Generally, an employee becomes eligible after completing 5 years of continuous service. Actual eligibility depends on employment type, employer coverage, and applicable law.
Q3. Is gratuity taxable in India?
Gratuity may be partly or fully tax-exempt depending on your employment category, the amount received, and current tax rules. For exact tax treatment, check the latest rules or consult a tax professional.
Q4. What is the maximum gratuity amount?
This calculator applies a maximum gratuity limit of Rs. 20,00,000. If the calculated value is higher, the result is capped at that amount.
Q5. How is gratuity calculated?
The calculator adds basic salary and DA, applies the year-rounding rule based on months of service, then uses either the 26-day formula or 30-day formula depending on whether the Gratuity Act toggle is selected.