Gratuity Calculator
Calculate your retirement benefit as per the Payment of Gratuity Act, 1972.
*Minimum 5 years required for eligibility.
Eligibility Rules
- Must complete 5 years of service.
- 15 days salary for every year.
- Max limit: ₹20 Lakhs.
What is Gratuity?
Gratuity is a monetary benefit given by an employer to an employee in recognition of their long-term service. In India, it is governed by the Payment of Gratuity Act, 1972. It is usually paid at the time of retirement, resignation, or termination after completing at least 5 years of continuous service.
How to Use the Gratuity Calculator?
Calculating your gratuity is simple with our tool. Follow these steps:
- Enter Basic Salary + DA: Input your last drawn monthly basic salary plus dearness allowance.
- Enter Years of Service: Provide the total number of years you have worked with the organization.
- Click Calculate: The tool will immediately show your estimated gratuity amount.
Example Calculation:
If your last drawn Basic + DA is ₹50,000 and you have served for 10 years:
Gratuity = (15 * 50,000 * 10) / 26 = ₹2,88,461
Why Gratuity Is Important
Gratuity acts as a financial security benefit for employees after long-term service. It helps workers build a retirement cushion and provides additional financial support during resignation, retirement, or unexpected job transitions.
For many salaried employees in India, gratuity becomes an important part of overall retirement planning along with EPF, pension, and savings investments.
Frequently Asked Questions (FAQ)
1. Is gratuity taxable in India?
For government employees, gratuity is fully tax-exempt. For private-sector employees, it is exempt up to ₹20 Lakhs under current tax laws.
2. What is the minimum service period for gratuity?
An employee must complete at least 5 years of continuous service with the same employer to be eligible for gratuity.
3. How is the 26-day factor calculated?
The law assumes 26 working days in a month (excluding 4 Sundays). Thus, the daily wage is calculated as (Monthly Salary / 26).
4. Is gratuity paid during resignation?
Yes. Employees who resign after completing at least 5 years of continuous service are eligible to receive gratuity from their employer.