Gratuity Calculator
Calculate the gratuity you're owed under the Payment of Gratuity Act, based on your last drawn salary and years of service.
6 or more months rounds up to an extra year, per the Act's own rule.
Gratuity payable
₹6,05,769
Based on 21 years of service
Gratuity tips
- Confirm whether your employer is covered under the Payment of Gratuity Act — the formula differs slightly if not.
- A salary revision shortly before leaving can meaningfully change your gratuity payout, since it's based on your last drawn salary.
- Gratuity is tax-exempt up to the statutory ceiling for most private-sector employees — check the current limit before assuming it's fully tax-free.
Guides worth reading
How it's calculated
Gratuity is calculated using a fixed statutory formula, not a rate of return: 15 days' wages for every completed year of service, based on your last drawn salary. Years of service are rounded per the Act's own rule — 6 or more additional months rounds up to a full extra year; fewer than 6 months is dropped.
Gratuity = 15 × last drawn salary (basic + DA) × years of service ÷ 26
Example
With a last drawn salary of ₹50,000 and 20 years 7 months of service (rounded up to 21 years, per the Act's 6-month rule), the gratuity payable is roughly ₹6,05,769.
About gratuity
Gratuity is a lump-sum payment employers are legally required to make to employees who leave after a minimum period of service — a reward for long-term service, governed by the Payment of Gratuity Act, 1972, for organisations it covers (most employers with 10 or more employees).
How it works
The formula uses your last drawn salary (basic + DA, not your full gross pay) and your years of completed service, rounded per the Act's 6-month rule. The result is capped at a statutory ceiling, currently ₹20,00,000 — any amount an employer chooses to pay above that is discretionary, not a legal entitlement.
How to use it
- Set your last drawn salary (basic + DA only).
- Set your completed years of service.
- Set any additional completed months beyond those full years — the calculator applies the Act's rounding rule automatically.
Strategies
Since gratuity is based on your last drawn salary, a salary revision shortly before leaving can meaningfully change the payout — it's worth checking the timing if you're planning a departure around a scheduled raise. Also confirm whether your organisation is actually covered under the Act, since a small number of employers aren't, and use a slightly different formula (15/30 instead of 15/26) in that case.
Important caveats
- This calculator uses the "covered under the Act" formula (÷26), which applies to the large majority of salaried employees — organisations not covered use a slightly different formula (÷30).
- Eligibility generally requires 5 years of continuous service, except in cases of death or disablement.
- Gratuity is tax-exempt up to the statutory ceiling for private-sector employees covered by the Act; amounts above the ceiling, or for employees not covered, may be partially taxable.
Why it works
Unlike an investment calculator, there's no compounding or rate assumption here — gratuity is a fixed statutory formula applied once, at the time of leaving, based only on your final salary and completed years of service.
Benefits
- A guaranteed, legally mandated payout for long-term employees — not dependent on employer discretion (up to the statutory ceiling).
- Simple, transparent formula that doesn't depend on market performance or interest rates.
- Tax-exempt up to the statutory ceiling for most private-sector employees.
Frequently asked questions
Why does 20 years 7 months round to 21 years?
The Payment of Gratuity Act rounds any additional period of 6 months or more up to a full extra year, and drops anything less than 6 months. So 20 years 7 months counts as 21 years, but 20 years 5 months counts as 20 years.
Is there a maximum gratuity amount?
Yes — the statutory ceiling is ₹20,00,000 (as of the 2018 amendment). If the formula result exceeds that, only ₹20,00,000 is a legal entitlement; anything above it is at your employer's discretion, not something you can claim.
Do I need a minimum number of years to be eligible?
Generally yes — 5 years of continuous service, except in cases of death or disablement, where the minimum doesn't apply. This calculator flags results below 5 years as reference-only, since you likely wouldn't be eligible.
Learn more from official sources
- Ministry of Labour & Employment — administers the Payment of Gratuity Act, 1972.
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