Gratuity Calculator
Estimate the gratuity amount you may receive based on your last drawn salary and years of service.
This calculator is aligned to common interpretation of the Payment of Gratuity Act, 1972 for educational planning. It explains the formula, rounding logic, eligibility context, and tax treatment at a high level.
Calculator Inputs
Last Drawn Salary (Basic + DA)
Updates instantly as you edit salary fields.
₹60,000
Growth Visualization
Estimated gratuity if service years move around your current input and salary remains the same.
5Y
₹1,73,077
6Y
₹2,07,692
7Y
Current₹2,42,308
8Y
₹2,76,923
9Y
₹3,11,538
Calculation Breakdown
Salary Base
₹60,000
Basic + DA
Service Factor
15 / 26
Based on selected employment type
Eligible Years Used
7
After rule-based adjustment
For employees covered under the Payment of Gratuity Act, this calculator uses: (Basic + DA) x (15 / 26) x Eligible Years.
- 15 represents salary for 15 days.
- 26 represents average working days in a month.
- If additional months are more than 6, service is rounded up to the next year in covered calculations.
Rounding examples
7 years 5 months → 7 eligible years
7 years 7 months → 8 eligible years
Eligibility Rules (Simple View)
Who is usually eligible?
Employees who satisfy the applicable service conditions and employer coverage criteria can generally claim gratuity on eligible exit events.
Minimum service requirement
A five-year benchmark is commonly used in many covered cases, with specific exceptions in certain situations such as death or disablement.
Continuous service
Continuous service means service without disqualifying breaks, while recognized interruptions may still count under rules.
Exceptions and disputes
Eligibility can involve employer records, legal interpretation, and event-specific conditions. Official documentation matters.
Tax on Gratuity
Government employees generally receive gratuity that is fully exempt from income tax.
Private sector employees may receive a full or partial exemption depending on the applicable provisions of the Income-tax Act and the exemption limits in force.
If the gratuity received exceeds the eligible exemption, the excess amount may be taxable.
This calculator estimates the gross gratuity amount only and does not calculate tax.
Tax laws and exemption limits may change over time, so users should verify the latest rules or consult a qualified tax professional if needed.
Frequently Asked Questions
Related Calculators
Plan gratuity together with retirement and long-term wealth tools.
Gratuity Planning Guide
What is gratuity?
Gratuity is a service-linked lump-sum retirement benefit paid by employers under applicable rules and employment conditions.
Why gratuity is paid
It recognizes long-term service and helps employees with a transition corpus during retirement or employment exit.
Benefits of gratuity
It adds a non-market-linked retirement cash component that can support debt reduction, emergency reserves, or income planning.
Eligibility rules
Eligibility depends on service continuity, duration thresholds, employer coverage, and nature of separation.
Formula explained
Covered formula uses salary base (Basic + DA), a service factor, and eligible service years after month-rounding rules.
Factors affecting gratuity
Last drawn salary, DA, years of service, month rounding, and employment type directly affect the estimate.
Common mistakes
Ignoring DA, misreading year-rounding rules, and assuming tax-free payout in all cases are common errors.
Gratuity vs pension
Gratuity is typically a one-time lump sum; pension is typically periodic post-retirement income.
Gratuity vs EPF
EPF is a contribution-based retirement accumulation system. Gratuity is an employer-paid terminal benefit subject to service conditions.
Using gratuity in retirement planning
Treat gratuity as one component of retirement capital. Combine it with EPF/NPS/savings and an income-withdrawal strategy for long-term sustainability.