Gratuity Calculator
Calculate your gratuity amount as per the Payment of Gratuity Act, 1972. Estimate your retirement benefits based on your last drawn salary and years of service.
Employment Details
Salary Details
Additional Options
Gratuity Calculation
Calculation Breakdown
Maximum Gratuity Limit
Gratuity Eligibility Rules
Covered under Gratuity Act
- Minimum 5 years of continuous service required
- Applies to organizations with 10+ employees
- Eligible on superannuation, retirement, resignation, death, or disablement
- Formula: (15/26) × Last drawn salary × Completed years of service
- Maximum limit: ₹20 lakhs
Not covered under Gratuity Act
- Organizations with less than 10 employees
- Minimum service period as per company policy
- Calculation based on company's gratuity policy
- Typically: (15/30) × Last drawn salary × Completed years of service
- No statutory maximum limit
Important Notes
- Service period rounded to nearest full year
- More than 6 months counted as full year
- Salary includes Basic + Dearness Allowance
- Tax-free up to ₹20 lakhs under Section 10(10)
- Nomination facility available for beneficiaries
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About Gratuity & Calculation Process
What is Gratuity?
Gratuity is a statutory retirement benefit paid by employers to employees who have rendered continuous service for at least 5 years. It is governed by the Payment of Gratuity Act, 1972 and is a form of gratitude from the employer for the services rendered by the employee.
Key Features of Gratuity
- Eligibility: 5+ years of continuous service
- Coverage: Organizations with 10+ employees
- Calculation: Based on last drawn salary and years of service
- Maximum Limit: ₹20 lakhs (as per latest amendment)
- Tax Benefits: Tax-free under Section 10(10) of Income Tax Act
- Payment: Payable on retirement, resignation, death, or disablement
Gratuity Calculation Process
Determine Eligibility
Check if employee has completed minimum 5 years of continuous service
Eligible = (Service Years ≥ 5)
Calculate Last Drawn Salary
Sum of basic salary and dearness allowance
Last Salary = Basic Salary + Dearness Allowance
Compute 15 Days Salary
Calculate salary for 15 days based on last drawn salary
15 Days Salary = (Last Salary × 15) ÷ 26
Determine Completed Years
Calculate total completed years of service
Service Years = Retirement Date - Joining Date
Apply Gratuity Formula
Multiply 15 days salary by number of completed years
Gratuity = 15 Days Salary × Completed Years
Check Maximum Limit
Ensure gratuity doesn't exceed statutory limit of ₹20 lakhs
Final Gratuity = Min(Calculated Amount, ₹20,00,000)
Gratuity Formula for Different Cases
Gratuity = (15 ÷ 26) × Last Salary × Years
26 working days in a month
Gratuity = (15 ÷ 30) × Last Salary × Years
30 calendar days in a month
Gratuity = 7 Days Wages × Seasons
For seasonal employment
Gratuity Tax Benefits
Section 10(10)
Gratuity received by government employees is fully exempt from tax
Covered under Act
Least of the following is exempt: Actual, 15 days salary, ₹20 lakhs
Not Covered under Act
Least of the following: Actual, ½ month salary, ₹10 lakhs
Death Cases
Gratuity received by nominee is fully exempt from income tax
Frequently Asked Questions
An employee must complete minimum 5 years of continuous service to be eligible for gratuity. This applies to superannuation, retirement, resignation, or death cases.
No, gratuity is not payable if you resign before completing 5 years of continuous service. However, in case of death or disablement, the 5-year rule is waived.
Salary includes basic pay and dearness allowance. Other allowances like HRA, conveyance, bonus, and commissions are not included in gratuity calculation.
An employer can forfeit gratuity wholly or partially only if the employee's services have been terminated for acts of violence, moral turpitude, or riotous conduct.
Gratuity received by government employees is fully exempt. For others, the least of actual gratuity, 15 days salary, or ₹20 lakhs is exempt under Section 10(10).
Yes, employees can nominate family members to receive gratuity in case of death. The nomination form should be submitted to the employer at the time of joining.