What is Gratuity Calculator?
Gratuity Calculator computes your gratuity entitlement based on your last drawn salary and years of service, using the formula specified under India’s Payment of Gratuity Act, 1972.
Gratuity is your right — not a gift. If you’ve worked 5+ years with the same employer, you’re legally entitled to it when you resign, retire, or are terminated (other than for misconduct).
The Gratuity Formula
For employees covered under the Payment of Gratuity Act:
Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26Where:
- Last Drawn Salary = Basic Salary + Dearness Allowance (DA)
- 15 = 15 days of pay per year of service
- 26 = working days per month (assumed)
Key Eligibility Rules
5-Year Minimum
Must have completed at least 5 years of continuous service with the same employer.
Rounding Rule
If the last year includes more than 6 months, it's counted as a full year. Less than 6 months is dropped.
Not Covered Employees
Organisations with fewer than 10 employees may not be covered. Some use an ex-gratia formula instead.
₹20 Lakh Cap
The maximum gratuity exempt from tax is ₹20 lakh. The Act's calculation may yield more — the cap applies to tax treatment, not payment.
How to Use Gratuity Calculator
Enter last drawn salary
Enter your Basic + DA (not CTC or gross salary). Gratuity is calculated on this base only.
Enter years of service
Enter total completed years. If you have 4 years 7 months, that rounds to 5 years.
See the calculation
Your gratuity amount appears with the full formula breakdown.
Check the tax status
The calculator shows whether your amount falls within the ₹20 lakh tax-exempt limit.
Gratuity Example
| Input | Value |
|---|---|
| Basic + DA (monthly) | ₹50,000 |
| Years of service | 8 years |
| Formula | (50,000 × 15 × 8) / 26 |
| Gratuity | ₹2,30,769 |
Tips & Common Mistakes
Only Basic + DA counts, not HRA or allowances. Many employees mistakenly use their gross or CTC salary. The Act specifies Basic + Dearness Allowance only.
Verify the 6-month rounding. If you’ve worked 5 years 7 months, that counts as 6 full years for the gratuity calculation. 5 years 4 months counts as 5 years.
Gratuity forfeiture on misconduct. If terminated for proven misconduct, the employer has the right to forfeit gratuity. This is the only legal exception — not poor performance or redundancy.
Related Tools
- Salary Calculator — break down your CTC to understand take-home
- FD Calculator — invest your gratuity payout in a fixed deposit
- PPF Calculator — plan long-term savings alongside your gratuity