Gratuity Calculator
What is a Gratuity Calculator?
A Gratuity Calculator is an online tool that helps employees estimate the lump sum amount they will receive upon leaving an organization. Gratuity is a financial benefit given by an employer as a token of appreciation for long-term service. It is governed by the Payment of Gratuity Act, 1972, which ensures that eligible employees receive gratuity upon retirement, resignation, or termination after at least five years of continuous service.
However, gratuity can be paid even before completing five years in cases of death, disability, or severe illness. The amount payable depends on your last drawn salary and total years of service.
If you’re planning your retirement or switching jobs, use our Gratuity Calculator to get an accurate estimate of how much gratuity you are eligible for.
How is Gratuity Calculated?
The gratuity calculation method varies based on whether your employer is covered under the Gratuity Act or not.
1️⃣ For Employees Covered Under the Gratuity Act, 1972
The formula used is:
Gratuity=(Last Drawn Salary×15×Years of Service)/26
Where:
- Last Drawn Salary = Basic Pay + Dearness Allowance (D.A)
- 15 = Number of days considered per year
- 26 = Working days in a month
✅ Example Calculation:
If your last drawn salary (Basic + D.A) is ₹50,000 and you have worked for 10 years and 7 months, the tenure is rounded to 11 years.
Gratuity=(50,000×15×11)/26=₹3,17,308
📌 Important Points:
- If you have worked for more than 6 months in your final year, it is rounded up to the next year.
- Example: 10 years 7 months → Considered as 11 years
- Example: 10 years 5 months → Considered as 10 years
- The maximum tax-free gratuity limit is ₹20 lakhs. Any amount above this is taxable.
2️⃣ For Employees NOT Covered Under the Gratuity Act
Even if your employer is not covered under the Gratuity Act, you are still eligible for gratuity. However, the calculation changes slightly. The formula used is:
Gratuity=(Last Drawn Salary×15×Years of Service)/30
✅ Example Calculation:
If you have worked for 7 years and your last drawn salary was ₹35,000, then:
Gratuity=(35,000×15×7)/30=₹1,22,500
How Can the Gratuity Calculator Help You?
Using our Gratuity Calculator simplifies financial planning in multiple ways:
✅ Instant & Accurate Calculation – Get precise gratuity estimates in seconds.
✅ Plan Your Retirement Better – Helps you understand the lump sum amount you’ll receive.
✅ Easy to Use – No complex formulas; just enter basic details and get results.
✅ Tax Planning – Know how much gratuity is tax-exempt.
How to Use the Gratuity Calculator?
Using our Gratuity Calculator is simple and hassle-free. Just follow these steps:
1️⃣ Enter your Current Monthly Salary (Basic Pay + Dearness Allowance).
2️⃣ Select the total years and months of service.
3️⃣ Click on “Calculate” to get the exact Gratuity Amount Payable instantly.
🎯 No complex calculations, no confusion—just instant results!
Taxation on Gratuity – What You Need to Know
Gratuity is subject to taxation based on your employer type:
✅ Government Employees – 100% Tax-Free gratuity.
✅ Private Sector Employees – Tax-free up to ₹20 lakhs in a lifetime.
For private employees, the least of the following is tax-exempt:
- ₹20 lakhs (maximum limit)
- Actual gratuity received
- Gratuity amount as per the formula
📌 Example: If your total gratuity is ₹25 lakhs, only ₹20 lakhs is tax-free, and the remaining ₹5 lakhs is taxable.
FAQs on Gratuity Calculation
1️⃣ Who is eligible for gratuity?
Any employee who has worked for at least five years in an organization is eligible. However, gratuity is paid even before five years in cases of death or disability.
2️⃣ What happens if I work for 4 years and 11 months?
You are not eligible for gratuity unless your employer has a special policy. Some companies round it off if the tenure includes 240+ working days in the final year.
3️⃣ Can I withdraw gratuity before retirement?
No, gratuity is only payable upon resignation, retirement, or termination. It is not a withdrawal-based investment.
4️⃣ Is gratuity included in CTC (Cost to Company)?
Yes, many companies include gratuity in their CTC but pay it only after completing five years of service.
5️⃣ Can an employer refuse to pay gratuity?
No, gratuity is a statutory benefit. An employer cannot refuse unless the employee was terminated for misconduct.
Plan Your Future with Our Gratuity Calculator
Understanding your gratuity benefits is an essential part of retirement planning. Our Gratuity Calculator helps you:
✅ Get instant results
✅ Plan your savings effectively
✅ Know your tax liability in advance
📌 Try our Gratuity Calculator now and secure your financial future!
Why Choose Our Gratuity Calculator?
✔ Accurate & Instant – No need to manually apply formulas.
✔ User-Friendly – Simple inputs, no technical knowledge required.
✔ SEO-Optimized for Google Search – Ensuring better reach and visibility.
✔ 100% Free – No sign-ups, no hidden charges.
💡 Start planning your gratuity payout today! 🚀