Gratuity Calculator

How to use Gratuity Calculator

1. Enter your last drawn monthly salary, meaning basic pay plus dearness allowance.
2. Enter completed years of service and any extra months and days.
3. Choose whether your employer is covered by the Gratuity Act (divide by 26) or not (divide by 30).
4. Optionally type the current tax-exempt ceiling to compare, then read the estimate and the formula line.

What gratuity is

Gratuity is a lump sum that an employer pays as a token of gratitude for long service, normally when the employee leaves, retires or in certain other situations. In India the framework is the Payment of Gratuity Act, which applies to establishments of certain types and sizes. Whether you are covered, the minimum service needed and the amount that can be received tax-free are matters of law and notification, and they change. Treat the figure from this page as an estimate to plan with, and confirm the final amount with your employer.

The formula and a worked example

For a covered employee: Gratuity = (last drawn monthly salary x 15 x completed years of service) / 26. Salary here means basic pay plus dearness allowance, and not allowances such as HRA or bonuses. The years of service are counted as completed years, with the rounding rule that more than six months in the last year counts as another full year.

Example: last drawn basic plus DA is 50,000 and service is 10 years 8 months. Eight months is more than six, so 11 years are counted. Gratuity = 50,000 x 15 x 11 / 26 = 3,17,307.69. For an employer that is not covered and uses 30 as the divisor, the same facts give 50,000 x 15 x 11 / 30 = 2,75,000. With exactly 10 years 6 months and no extra days, years counted stay at 10, giving 50,000 x 15 x 10 / 26 = 2,88,461.54.

Using the result well

Use the result for planning, for negotiating a notice period or for comparing job offers where gratuity forms part of the package. The optional ceiling box lets you enter the current legal limit yourself so the page splits the estimate into the part within it and the part above it. Whether any portion is taxable depends on your circumstances, so seek professional advice on tax.

Everything runs in your browser and nothing you type is stored or sent. This is not legal or tax advice.

• Use basic plus DA, not total CTC.
• Check your appointment letter for the gratuity clause.
• Keep records of your joining date and any breaks in service.

Why use this gratuity calculator tool

• Statutory formula shown. The result is displayed as salary x 15 x years / divisor, so you can verify every step.
• Rounding rule built in. Service of more than six months in the final year is counted as a full year.
• Covered and non-covered options. Switch the divisor between 26 and 30 depending on your employer type.
• No hard-coded limits. The tax-exempt ceiling is an optional input you set, because legal limits change.

Frequently asked questions

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