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What is a Gratuity Calculator?
Gratuity is a lump-sum benefit your employer pays out as a token of appreciation for long service, and it's mandated by law under the Payment of Gratuity Act, 1972 for organisations employing 10 or more people. Many employees are unaware of exactly how much they're entitled to when they resign, retire, or are laid off after several years of service. This calculator applies the statutory formula directly so you can estimate your gratuity payout using just your last drawn salary and total years of service.
Gratuity Formula (Payment of Gratuity Act, 1972)
Here, "last drawn salary" typically means basic pay plus dearness allowance, and the 15/26 factor represents 15 days of wages for every completed year of service, calculated on a 26-working-day month.
Worked Example
An employee with a last drawn salary of ₹40,000 and 12 years of continuous service would receive: ₹40,000 × 12 × 15 ÷ 26 = ₹2,76,923 approximately as their gratuity amount on leaving the organisation.
How to Use This Calculator
- Enter your last drawn monthly salary (basic + DA).
- Enter your total years of service with the employer.
- Click Calculate to see your estimated gratuity payout.
Rules You Should Know
- Gratuity is generally payable only after completing 5 years of continuous service with the same employer, except in cases of death or disability, where this condition is waived.
- For calculation purposes, a service period of more than 6 months in the final year is typically rounded up to the next full year.
- Gratuity received is tax-exempt up to ₹20 lakh under current Income Tax rules for employees covered by the Act; amounts above this limit may be taxable.
- Private-sector employers not covered by the Act can still choose to pay gratuity voluntarily, though the calculation basis may differ slightly.
📅 Last reviewed: July 2026 · Formulas verified against RBI/SEBI/IT Dept guidelines.