Calculate your gratuity amount as per the Payment of Gratuity Act 1972.
A Gratuity Calculator estimates the lump-sum gratuity amount an employee is entitled to receive upon leaving a job after completing a minimum period of continuous service, based on their last drawn salary and total years of service. Gratuity is a statutory benefit in many countries designed to reward long-term employees for their service, paid out at retirement, resignation, or termination after meeting the required eligibility period.
A commonly used formula is: Gratuity = (Last Drawn Basic Salary + Dearness Allowance) × 15 ÷ 26 × Number of Years of Service, where the factor of 15/26 represents 15 days of wages for each completed year of service, based on a 26-working-day month, though the specific formula and eligibility period can vary by jurisdiction and applicable labor law.
Enter your last drawn basic salary (plus any applicable dearness allowance), and your total years of continuous service with the employer. The calculator returns your estimated gratuity payout, helping with financial planning around a job transition or retirement.
Example 1: An employee with a last drawn basic salary of 50,000 and 10 years of service has an estimated gratuity of 50,000 × 15 ÷ 26 × 10 ≈ 2,88,462.
Example 2: An employee with a last drawn basic salary of 80,000 and 20 years of service has an estimated gratuity of 80,000 × 15 ÷ 26 × 20 ≈ 9,23,077, illustrating how both salary level and years of service significantly influence the final gratuity amount.
Many jurisdictions require a minimum of five years of continuous service with the same employer before an employee becomes eligible for gratuity, though certain exceptions, such as death or disability, may waive this minimum service requirement.
Gratuity calculations typically use only the basic salary component (plus dearness allowance where applicable) rather than the full gross salary, which often includes additional allowances and benefits that aren't factored into the standard gratuity formula.
Common practice rounds a partial year to a full year if the employee has completed more than six months in that final year of service, though specific rules can vary depending on applicable local labor regulations.
Many jurisdictions provide a tax exemption on gratuity up to a specified limit, with any amount received above that threshold typically becoming taxable, so it's worth checking the specific exemption limits that apply in your situation.
Gratuity is generally payable regardless of whether the employment ends through resignation, retirement, or termination (except in cases of termination for serious misconduct, depending on jurisdiction-specific rules), as long as the minimum service eligibility period has been met.
Gratuity is a single lump-sum payment funded entirely by the employer based on service tenure, while a provident fund typically involves ongoing contributions from both employee and employer that accumulate with interest over the employment period, making the two distinct types of retirement or separation benefits.
No, where gratuity is a statutory legal requirement, employers are generally obligated to pay eligible employees, and failure to do so can result in legal penalties, though the specific enforcement mechanisms vary by jurisdiction.
Since gratuity is based on the last drawn salary, a recent salary increase does increase the gratuity calculation base, which is one reason gratuity amounts can sometimes seem disproportionately generous relative to an employee's average salary over their full tenure.
Most regulations require employers to disburse gratuity within a specified time frame after an employee's exit, commonly within 30 days, though actual processing times can vary depending on the employer's internal procedures and any documentation requirements.
In some jurisdictions, gratuity can be partially or fully forfeited if an employee is terminated for proven serious misconduct such as fraud or violent behavior, though ordinary performance issues or resignation typically do not affect gratuity eligibility.
Yes, gratuity eligibility is generally tied to continuous service with a single employer, so changing jobs typically means starting the required minimum service period again with the new employer, regardless of how much gratuity-eligible service was completed elsewhere.
Often yes, many employers include an estimated gratuity accrual within the total cost-to-company figure even though it's only actually paid out upon leaving after the eligibility period, which is worth understanding when comparing job offers.