Gratuity Calculator
Estimate the gratuity payable to you under India's Payment of Gratuity Act, 1972, based on your last drawn monthly salary (Basic + DA) and your total years of continuous service.
Fill in the form and select "Calculate" to see your results here.
What is the Gratuity Calculator?
This calculator estimates the lump-sum gratuity amount payable to an employee on leaving a job — whether by retirement, resignation, superannuation, or termination (other than for misconduct) — after completing a minimum period of continuous service. Gratuity is a statutory retiral benefit, separate from provident fund or pension, and is paid entirely by the employer. Enter your last drawn monthly salary and your total years of service to see both the amount the formula produces and the amount actually payable after applying the statutory ceiling.
What the Payment of Gratuity Act says
The Payment of Gratuity Act, 1972 applies to establishments — factories, mines, oilfields, plantations, ports, railways, shops, and other establishments — employing 10 or more people. An employee covered under the Act becomes eligible for gratuity only after rendering at least 5 years of continuous service with the same employer. This 5-year rule does not apply, and gratuity becomes payable immediately, if employment ends due to the employee's death or disablement caused by accident or disease.
For employees covered under the Act, gratuity is calculated as 15 days' wages (based on the last drawn Basic + DA) for every completed year of service, using a 26-day month as the wage base — not a 30- or 31-day calendar month. Employees not covered under the Act (for example, in establishments with fewer than 10 employees, though many still choose to pay gratuity voluntarily) are commonly paid under a different, less standardised convention that typically uses a 30-day month instead of 26 days; this calculator applies only the formula for employees covered under the Act.
How to use this calculator
- Enter your last drawn monthly salary — Basic pay plus Dearness Allowance only, not your full CTC or gross salary.
- Enter your total years of service as a decimal, combining completed years and months (for example, 12 years and 7 months as 12.58).
- Select "Calculate Gratuity" to see your completed years of service as used in the formula, the calculated gratuity amount, and the final gratuity payable after applying the statutory ceiling.
Formula
A service period of 6 months or more beyond a completed year is rounded up to the next full year; anything less is rounded down. The result of this formula is then capped at the statutory ceiling of ₹20,00,000, if it exceeds that amount.
Example
Consider an employee with a last drawn monthly salary (Basic + DA) of ₹60,000 and 12 years 7 months of continuous service. Since 7 months is 6 months or more, the service period rounds up to 13 completed years. Applying the formula: ₹60,000 × 15 × 13 / 26 = ₹4,50,000. Since this is well below the ₹20,00,000 statutory ceiling, the full ₹4,50,000 is payable.
Factors that affect gratuity
- Rounding of partial years. A completed year with 6 or more months of additional service is rounded up; fewer than 6 months is ignored. This rounding convention has a real impact near year boundaries.
- Statutory ceiling. The gratuity amount payable under the Act is currently capped at ₹20,00,000, regardless of what the formula produces. This ceiling is set by the government and has been revised upward in the past, so check the current limit before relying on this figure for major decisions.
- Tax treatment. Gratuity received by employees covered under the Act is exempt from income tax up to the statutory ceiling, subject to conditions. Government employees generally enjoy full exemption. Full tax treatment of gratuity is outside the scope of this calculator — see our income tax calculator to estimate tax on income beyond the exempt gratuity amount.
- Coverage under the Act. This formula applies specifically to employees covered under the Payment of Gratuity Act. Employees not covered may be paid under a different, employer-specific formula.
Frequently Asked Questions
Generally, no. The Payment of Gratuity Act requires at least 5 years of continuous service before gratuity becomes payable, except in cases of the employee's death or disablement due to accident or disease, where the 5-year requirement does not apply. This calculator will still show a result for reference even if you enter fewer than 5 years, but it flags that the amount is not payable under normal eligibility rules.
Gratuity received by employees covered under the Act is exempt from income tax up to the ₹20,00,000 statutory ceiling, subject to conditions; amounts above the ceiling, if paid, may be taxable. Government employees generally receive full exemption. This calculator does not compute tax — check your specific situation or consult a tax professional.
Yes. The formula uses Basic pay plus Dearness Allowance (DA) only, based on your last drawn salary. It does not include HRA, bonuses, other allowances, or any other components of your CTC.
Some employers — often smaller establishments with fewer than 10 employees — are not covered under the Act, though many still choose to pay gratuity voluntarily, typically using a different convention (commonly a 30-day month instead of 26 days). This calculator applies only the statutory formula for employees covered under the Act; if you're unsure whether your employer is covered, check your appointment letter or HR policy.
The Payment of Gratuity Act sets a maximum amount that is payable as gratuity, currently ₹20,00,000. Even if the formula produces a higher figure based on your salary and years of service, the amount actually payable under the Act cannot exceed this ceiling. Some employers pay amounts above the ceiling voluntarily as an ex-gratia payment, but this is not required by law.
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Calculations are estimates based on the information entered and the statutory formula under the Payment of Gratuity Act, 1972. They do not account for every employer policy, exemption, or edge case, and are not a substitute for professional financial or legal advice. See our full disclaimer.