Gratuity is a lump sum payment given by an employer to an employee for long-term service, payable after completing at least five years of continuous employment under the Payment of Gratuity Act, 1972.

Who is eligible for gratuity in India?

An employee becomes eligible for gratuity after completing five years of continuous service with the same employer. The five-year rule is waived in case of death or permanent disability.

What is the maximum gratuity limit?

The maximum gratuity amount payable in India is ₹20 lakh. Any amount above this limit is treated as ex-gratia.

Gratuity received by government employees is fully tax-free. For private employees, gratuity is tax-exempt up to ₹20 lakh, subject to conditions under the Income Tax Act.

Is gratuity payable after 4 years and 7 months?

As per a Madras High Court judgment, employees who complete 4 years and 240 days of service may be eligible for gratuity.

Gratuity Calculator – Calculate Your Gratuity Amount

A Gratuity Calculator is a simple tool that helps employees calculate the gratuity amount they may receive when they retire or leave a job after completing the required service period. By entering your last drawn salary and years of service, you can instantly estimate your gratuity payout.

This tool is especially useful for retirement planning, job change decisions, and tax planning.

What Is Gratuity?

Gratuity is a lump sum amount paid by an employer to an employee as a reward for long-term service. It is governed by the Payment of Gratuity Act, 1972.

An employee becomes eligible for gratuity after completing at least 5 years of continuous service, except in cases of death or permanent disability, where the 5-year rule does not apply.

The gratuity amount depends on:

Last drawn basic salary
Dearness allowance (DA) (if applicable)
Total years of service

What Is a Gratuity Calculator?

A Gratuity Calculator estimates how much gratuity you will receive when you resign, retire, or superannuate.

You only need to enter:

Last drawn basic salary + DA
Number of completed years of service

The calculator gives an instant and accurate gratuity estimate.

Gratuity Calculation Formula

For Employees Covered Under the Gratuity Act

Gratuity = (Years of Service × Last Drawn Salary × 15) ÷ 26

For Employees Not Covered Under the Gratuity Act

Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 30

Gratuity Calculation Examples

Example 1: Covered Under Gratuity Act

Salary: ₹30,000
Years of Service: 15

Gratuity = ₹2,59,615

Maximum gratuity limit is ₹20 lakh. Service above 6 months is rounded up.

Example 2: Not Covered Under Gratuity Act

Salary: ₹30,000
Years of Service: 7

Gratuity = ₹1,05,000

How to Use the Gratuity Calculator

Enter your basic salary
Add dearness allowance (if applicable)
Enter total years of service
Click on calculate to get instant results

Benefits of Using a Gratuity Calculator

Instant and accurate calculation
No manual effort required
Helps in retirement and tax planning
Free and easy to use

Eligibility Criteria for Gratuity

Retirement or superannuation
Resignation after 5 years of service
Death or permanent disability
Paid to nominee in case of death

Taxation Rules on Gratuity

Government Employees

Gratuity received by government employees is fully tax-exempt.

Private Employees

The least of the following is tax-free:

₹20 lakh
Actual gratuity received
Eligible gratuity amount

Note: Lifetime maximum tax-free gratuity limit is ₹20 lakh.

Best Investment Options for Gratuity Amount

Fixed Deposits (FDs)
Public Provident Fund (PPF)
Employee Provident Fund (EPF)
National Pension System (NPS)
Equity & Debt Mutual Funds
Sovereign Gold Bonds (SGBs)
Real Estate & REITs

FAQ on Gratuity Calculator

1. Is gratuity payable after 4.5 years?

As per a Madras High Court judgment, employees who complete 4 years and 240 days may be eligible for gratuity.

2. Is gratuity mandatory after 5 years?

Yes, under the Payment of Gratuity Act, 1972, gratuity is mandatory after 5 years of continuous service.

3. What does 15/26 mean in gratuity calculation?

It represents 15 days’ salary divided by 26 working days in a month.

4. What is the maximum gratuity amount?

The maximum gratuity payable is ₹20 lakh.

5. How long does an employer take to pay gratuity?

Usually within 30 days from the last working day.

6. Will gratuity be lost if the employer goes bankrupt?

No. Gratuity is a statutory right protected under law.

7. Can I use the gratuity calculator multiple times?

Yes, you can use it unlimited times for free.

Did You Know?

Gratuity is a legal right, not a bonus.
Under the Payment of Gratuity Act, 1972, an employer must pay gratuity to an employee who completes 5 years of continuous service. Even if a company shuts down or faces losses, gratuity cannot be denied.