Gratuity Calculator

Gratuity Calculator: Find Your Final Payout in Seconds

Gratuity is a one-time payment your employer gives you as a thank-you for the years you've spent working at the company. It's not a bonus and it's not part of your monthly salary. It's a separate benefit that gets paid out when you leave the job, whether that's because you resigned, retired, or the company let you go, as long as you've completed the minimum required years of service.

This gratuity calculator does the maths for you. Enter your last drawn Basic Salary plus Dearness Allowance, tell it how many years and months you've worked, and it instantly shows your final gratuity amount using the same formula companies and HR teams actually use.

What Is Gratuity and Who Is Eligible?

In India, gratuity is governed by the Payment of Gratuity Act, 1972. Any employee who has completed 5 or more years of continuous service with the same employer is generally eligible to receive gratuity when they leave the organisation. The 5-year rule is waived only in the unfortunate case of an employee's death or disablement, where gratuity becomes payable regardless of how long they had worked.

It doesn't matter whether you resign, retire, get laid off, or are terminated for reasons other than misconduct — once you've crossed the 5-year mark, gratuity is your legal right, not a favour from your employer.

The Gratuity Formula This Calculator Uses

For employees covered under the Payment of Gratuity Act (this covers most companies with 10 or more employees), the formula is:

• Gratuity = (Last Drawn Basic Salary + DA) x 15 x Number of Years of Service / 26
• Here, 26 represents the number of working days considered in a month under the Act, and 15 stands for 15 days of salary for every completed year worked.

Formula for Employees Not Covered Under the Act

Some smaller organisations or specific roles fall outside the Act's coverage. In such cases, many employers still choose to pay gratuity, but they typically use a slightly different formula based on a 30-day month instead of 26:

• Gratuity = (Last Drawn Basic Salary + DA) x 15 x Number of Years of Service / 30
• This formula usually works out to a slightly lower payout compared to the Act's formula, since it divides by 30 instead of 26.

How the Rounding Rule Works

One detail that trips up a lot of people is how part-years get counted. For employees covered under the Act, if you've worked 6 months or more in your final year of service, it gets rounded UP to a full year. If you've worked less than 6 months in that final year, it simply gets dropped and only the completed years are counted.

For example, someone who has completed 7 years and 7 months of service is treated as having completed 8 years for the purpose of this calculation. But someone with 7 years and 4 months is treated as having completed only 7 years. This calculator applies that exact rule automatically, so you don't have to work it out by hand.

Worked Example: 7 Years 6 Months of Service

Say your last drawn Basic Salary plus DA is Rs 40,000 a month, and you've completed 7 years and 6 months at a company that is covered under the Payment of Gratuity Act.

• Since 6 months rounds up, effective years of service = 8
• Gratuity = (40,000 x 15 x 8) / 26
• Gratuity = 4,800,000 / 26
• Gratuity ≈ Rs 1,84,615

Is There a Maximum Limit on Gratuity?

Yes. As per the current rules (last revised in 2018), the maximum gratuity amount an employee can receive is capped at Rs 20,00,000, regardless of how high the formula-calculated amount comes to. If your calculated gratuity crosses this ceiling, the excess is either not paid at all, or paid separately as an ex-gratia amount at the employer's own discretion, outside the scope of the Act.

This calculator lets you toggle the statutory cap on or off, so you can see both the raw formula-based figure and the actual amount you're legally guaranteed to receive.

Is Gratuity Income Taxable?

For employees covered under the Payment of Gratuity Act, gratuity received up to the statutory limit is exempt from income tax. Any amount received beyond this limit is added to your taxable income for the year and taxed as per your applicable income tax slab. Employees not covered under the Act have a separate, generally lower exemption limit, so it's worth checking the current rules or asking your employer's payroll team for the exact figure that applies to your case.

Basic Salary Plus DA — Why Only These Two?

A common mistake is plugging in the full CTC or gross monthly salary into a gratuity calculation. The formula only uses Basic Pay plus Dearness Allowance (DA), not HRA, special allowances, bonuses, or any other component of your pay package. If your organisation doesn't pay a separate DA, you can simply use your last drawn Basic Salary on its own.

Advanced Features Built Into This Calculator

This tool goes beyond a basic one-line formula. You get a dedicated toggle to switch between the Act-covered formula (divide by 26) and the not-covered formula (divide by 30), plus a separate toggle to apply or remove the Rs 20,00,000 statutory ceiling so you can compare both scenarios instantly.

The results panel shows your final payable gratuity, the years actually used in the formula after rounding, the divisor applied, and the value of a single year of service, so you can see exactly how the number was built. A year-by-year growth chart projects how your gratuity would rise the longer you stay with the company, which is genuinely useful when you're deciding whether to switch jobs or stay a little longer to cross a milestone year. You can also copy a clean summary to your clipboard or export the entire calculation, including the full year-by-year projection, as a CSV file.

When Should You Use This Gratuity Calculator?

Use it before resigning to check how much gratuity you stand to receive, before signing a new offer letter to compare long-term benefits between two companies, while planning retirement to estimate your final settlement, or simply out of curiosity to see how gratuity accumulates over your career. HR teams, payroll professionals, and finance students also use tools like this to quickly cross-check manual calculations.

A Quick Note on Accuracy

This calculator follows the standard formula laid out in the Payment of Gratuity Act, 1972, along with the current statutory ceiling. Company-specific policies, state amendments, and case-by-case exceptions can occasionally change the final number, so treat this as a reliable planning estimate and confirm the exact figure with your HR or payroll department before making any financial decisions based on it.