Gratuity Calculator: Gratuity is a lump-sum payment made by employers to employees as a token of gratitude for their long-term service. It is a key part of employee benefits in India, governed by the Payment of Gratuity Act, 1972.
Calculating gratuity manually can be tricky due to varying salary structures and employment terms. A Gratuity Calculator simplifies this process, ensuring you get an accurate estimate instantly.
In this guide, you’ll learn:
What is gratuity and who is eligible?
How to calculate gratuity manually (with examples)
Benefits of using an online Gratuity Calculator
Tax rules on gratuity in India (2024)
Frequently Asked Questions (FAQs)
What is Gratuity?
Gratuity is a statutory benefit paid to employees who complete 5 or more years of continuous service with an organization. It is calculated based on:
Last drawn salary (Basic + DA)
Number of years served
Who is Eligible?
✅ Employees in companies with 10+ workers (covered under the Gratuity Act)
✅ Employees who have completed 5+ years of service (retirement, resignation, or superannuation)
✅ In case of death/disability, gratuity is paid regardless of tenure
How to Calculate Gratuity (Manual Calculation)
1. For Employees Covered Under the Gratuity Act
Gratuity=Last Drawn Salary (Basic + DA)×Years of Service×1526
15 = 15 days’ salary per year
26 = Number of working days in a month
Example:
Last Salary (Basic + DA) = ₹50,000
Years of Service = 10 years
Gratuity = (50,000 × 10 × 15) / 26 = ₹2,88,461
2. For Employees Not Covered Under the Gratuity Act
Gratuity=Last Drawn Salary (Basic + DA)×Years of Service×1530
(Here, 30 days is considered instead of 26)
Example:
Last Salary (Basic + DA) = ₹60,000
Years of Service = 7 years
Gratuity = (60,000 × 7 × 15) / 30 = ₹2,10,000
Benefits of Using a Gratuity Calculator
✅ Instant & Accurate Calculation – No manual errors
✅ Saves Time – Quick results in seconds
✅ Helps Financial Planning – Know your exit benefits in advance
✅ Tax Liability Estimation – Understand taxable vs. exempt amount
✅ Free & Easy to Use – No registration required
Gratuity Taxation Rules (2024)
| Category | Tax Treatment |
|---|---|
| Government Employees | Fully exempt |
| Private Sector Employees | Exempt up to ₹20 lakh (total gratuity received in lifetime) |
| Amount Above ₹20 Lakh | Taxable as per income slab |
Frequently Asked Questions (FAQs)
1. What is the maximum gratuity limit in India?
₹20 lakh (as per the Gratuity Act, 1972)
2. Can I get gratuity before 5 years?
Yes, only in case of death or disability (no minimum service required).
3. Is gratuity paid for voluntary resignation?
Yes, if you’ve completed 5+ years of service.
4. How is gratuity calculated for part-time employees?
Only full-time employees are eligible under the Gratuity Act.
5. Can a company refuse to pay gratuity?
No, if eligible as per law. Legal action can be taken if denied wrongfully.
Conclusion
A Gratuity Calculator helps employees estimate their rightful benefit accurately before resignation or retirement. Whether you’re planning a job change or retirement, knowing your gratuity amount ensures better financial decisions.
Try Our Free Gratuity Calculator Now & Plan Your Finances Smartly!
Key Takeaways
🔹 Gratuity = (Last Salary × Years of Service × 15) / 26
🔹 Minimum 5 years of service required (except in death/disability cases)
🔹 Tax-free up to ₹20 lakh for private employees
🔹 Use an online calculator for quick & error-free results