Gratuity Calculator
Gratuity payout under the Payment of Gratuity Act.
Inputs
This calculator applies to India — the rules behind it are Indian tax/regulatory rules, not just the currency, so it isn't shown in other currencies.
This calculator is for general information only and isn't financial advice. Rates, tax rules, and your actual eligibility depend on your specific situation — check with your bank or a qualified advisor before acting on it.
Formula
Gratuity = (15 ÷ 26) × Last drawn salary × Years of service
For employees covered under the Payment of Gratuity Act, gratuity equals fifteen days' wages for each completed year of service. 'Fifteen days' is computed as 15/26 of a month's salary (26 working days convention). Minimum five years of continuous service is required.
Worked example
An employee with ₹80,000 last drawn salary (basic + DA) and 10 years of service earns gratuity of about ₹4,61,538 — calculated as (15 ÷ 26) × 80,000 × 10. This is in addition to PF and leave encashment at separation.
Where this can give the wrong answer
- Fewer than 5 years of service yields zero gratuity under the Act — though some companies have internal policies that pay earlier.
- Maximum gratuity is capped at ₹20 lakh for private sector employees — amounts above the cap aren't reflected here.
- Last drawn salary should be basic plus dearness allowance only, not gross CTC including HRA or bonuses.
FAQ
- Government employees are fully exempt. Private sector employees get tax exemption up to ₹20 lakh under Section 10(10). Amounts above the exempt limit are taxable as salary income in the year of receipt.