Online Gratuity Calculator

What is Gratuity?

Gratuity is a lump sum amount paid by an employer to an employee as a token of appreciation for their long-term service to the company. It is governed by the Payment of Gratuity Act, 1972 in India.

Eligibility for Gratuity

To be eligible to receive gratuity, an employee must have completed at least 5 continuous years of service with the same employer. It is payable on:

• Resignation or retirement
• Superannuation
• Death or disablement (the 5-year rule is relaxed in these cases)

The Formula

The standard formula for calculating gratuity is:

Gratuity = (15 × Last Drawn Salary × Years of Service) / 26

Note: The Last Drawn Salary includes your Basic Salary + Dearness Allowance (DA). Also, any service over 6 months is rounded up to the next year.

Example

An employee with a last drawn salary (Basic + DA) of ₹50,000 and 8 years of service gets a gratuity of (15 × 50,000 × 8) / 26 = ₹2,30,769.

Common Use Cases

FAQs

What is gratuity in India?

Gratuity is a lump-sum payment an employer makes to an employee as a reward for continuous, long-term service, governed by the Payment of Gratuity Act, 1972. It's paid on resignation, retirement, superannuation, or death/disablement, and is separate from your regular salary, PF, or bonus — this calculator estimates that amount using the statutory formula above.

Who is eligible for gratuity?

You're generally eligible once you've completed at least 5 continuous years of service with the same employer. The 5-year requirement is waived if employment ends due to death or disablement — enter your years of service above and the calculator will flag whether you're eligible.

Is gratuity taxable?

For government employees, gratuity is fully tax-exempt. For private-sector employees covered under the Payment of Gratuity Act, exemption is available up to ₹20 lakh; amounts above that are taxable.