india gratuity calculator

What is gratuity in India?

Gratuity is a lump-sum benefit paid by an employer to an employee as a thank-you for long-term service. In India, gratuity is primarily governed by the Payment of Gratuity Act, 1972 for eligible establishments and employees.

It is commonly paid when you resign, retire, or are terminated after completing minimum service conditions. In special situations like death or disablement, the usual minimum service condition may not apply.

How this India gratuity calculator works

1) Covered under the Payment of Gratuity Act

For employees covered under the Act, the common formula is:

Gratuity = (Last Drawn Salary × 15 × Eligible Years of Service) / 26

• Last Drawn Salary means Basic + Dearness Allowance (DA).
• Eligible Years are rounded based on months: if additional months are 6 or more, they are counted as one full year.
• The statutory maximum gratuity limit is generally considered ₹20,00,000 (subject to applicable law updates).

2) Not covered under the Act (contractual/company policy case)

Some employers may use this estimate:

Gratuity = (Last Drawn Salary × 15 × Service Years) / 30

In this page, service years are treated proportionally (including additional months).

Eligibility basics you should know

• Typically, gratuity is payable after 5 years of continuous service.
• In many interpretations, 4 years + 240 days may be considered in specific cases, but this depends on legal context.
• For death or disablement, the 5-year condition may be waived.
• Seasonal and specific employment categories can have different rules.

Step-by-step: use this calculator

1. Enter your monthly Basic + DA.
2. Enter completed years of service.
3. Enter additional months (0 to 11).
4. Select whether you are covered under the Gratuity Act.
5. Click Calculate Gratuity to see the estimated amount and breakdown.

Example gratuity calculations

Example A (Covered under Act)

If Basic + DA = ₹60,000 and service is 10 years 7 months:

• Eligible years = 11 (because 7 months rounds up)
• Gratuity = 60,000 × 15 × 11 ÷ 26 = ₹3,80,769 (approx)

Example B (Not covered under Act)

If monthly salary = ₹60,000 and service is 10 years 7 months:

• Service years = 10 + 7/12 = 10.5833
• Gratuity = 60,000 × 15 × 10.5833 ÷ 30 = ₹3,17,500 (approx)

Tax on gratuity in India (quick view)

Taxability of gratuity depends on whether you are a government employee, covered under the Gratuity Act, or not covered. Exemptions are calculated under income tax rules and can vary based on least-of-three style conditions in many cases.

Because tax treatment can change with law and personal salary history, always verify with a tax professional before filing.

Common mistakes to avoid

• Using CTC instead of Basic + DA in the formula.
• Ignoring month-rounding rules for Act-covered employees.
• Assuming gratuity is always fully tax-free.
• Not checking employer-specific policy if not covered under the Act.

Final note

This India gratuity calculator is designed for planning and education. It helps you estimate your possible payout quickly, but your HR team and legal/tax documentation should be treated as final.