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