Gratuity Calculator

What is gratuity?

Gratuity is a one-time payment from employer to employee under the Payment of Gratuity Act, 1972. It is usually paid when you leave after long service — retirement, resignation, or termination — and also on death or disability.

How this calculator works

Salary means last drawn monthly basic + dearness allowance. Service length includes extra months as a fraction of a year. You need at least 5 years to qualify; the result is capped at ₹20 lakh.

Covered vs not covered

• • Covered: factories, mines, ports, and establishments with 10+ employees
• • Formula uses 26 working days per month for covered employers
• • Not covered: voluntary scheme; formula uses 30 days per month
• • Act applies once an establishment has had 10+ employees on any day

Tax

• • Government employees: gratuity is fully exempt
• • Private sector (covered employer): exempt up to ₹20 lakh
• • Not covered under Act: exempt up to ₹10 lakh
• • Amount above the exempt limit is taxed as salary

When it is paid

• • Employer should pay within 30 days of it becoming payable
• • Late payment attracts simple interest
• • Nominee or legal heir is paid if the employee dies

Before you rely on this figure

Employers may round service years differently (e.g. six months may count as a full year in some cases). Commissions, overtime, and allowances other than DA are usually excluded from "salary" for gratuity. Confirm the amount with your HR department or Form I payment slip.