1. What Is a Gratuity Calculator?
A gratuity calculator works out the lump sum an employer must pay an employee on leaving service under India’s Payment of Gratuity Act, 1972. Gratuity is a statutory thank-you for long service: it is not a bonus, not a negotiated settlement, and not dependent on the employer’s profits. If the Act covers your establishment and you have completed the qualifying service, the amount follows a fixed formula.
This calculator applies that formula to your own figures. Enter your last drawn monthly salary (basic + DA) and your joining and leaving dates, and it returns the gratuity payable, the exact service, the years counted after the part-year rounding rule, and whether the ₹20 lakh ceiling changed the result. Everything runs in your browser — your salary and dates are never sent anywhere.
Gratuity is most commonly paid on retirement or resignation, but the same formula covers termination, and the Act makes an exception to the service condition on death or disablement, where gratuity is payable to the employee or their nominee regardless of the length of service.
2. How to Use This Calculator
There are three inputs. The last drawn monthly salary is your basic pay plus dearness allowance in the final month of service — not your gross salary, and not including house rent allowance or other allowances. The joining date is the first day of the continuous service being counted, and the leaving date is the last working day (or a future date, if you want a projected figure).
Select Calculate Gratuity and the results panel shows the headline figure — gratuity payable — alongside four supporting facts: the service counted, the exact service in years, months and days, the amount before the ceiling, and the cap status. Reset clears all three inputs; Copy result puts a one-line summary on your clipboard.
3. How Gratuity Is Calculated
The Act’s formula is: gratuity = (15 ÷ 26) × last drawn monthly salary × completed years of service. The fraction 15/26 represents 15 days’ wages for each year of service, with a month treated as 26 working days. The salary in the formula is the wage last drawn — basic plus dearness allowance.
Service is counted in completed years, with one rounding rule: if the service beyond completed years exceeds 6 months, it counts as a full year. So 22 years and 8 months counts as 23 years, while 22 years and 5 months counts as 22 years. The calculator measures service by the calendar anniversary rule (the same completed-years logic this site uses for age), then applies the 6-month rule to the remainder.
Finally the ceiling is applied: gratuity cannot exceed ₹20,00,000 under the 2018 amendment to the Act. If the formula produces more, the payable figure is the ceiling, and the calculator shows the before-cap amount so the difference is visible.
4. Worked Examples
Example 1 — a straightforward case. Last drawn salary ₹60,000, service exactly 10 years. Gratuity = (15 ÷ 26) × 60,000 × 10 = ₹3,46,154. No rounding and no cap apply.
Example 2 — the rounding rule. Last drawn salary ₹1,20,000, service 22 years and 8 months. The 8 months exceed 6, so the counted service is 23 years. Gratuity = (15 ÷ 26) × 1,20,000 × 23 = ₹15,92,308.
Example 3 — the ceiling. Last drawn salary ₹3,00,000, service 30 years. The formula gives (15 ÷ 26) × 3,00,000 × 30 = ₹51,92,308, which is above the ceiling — so the gratuity payable is ₹20,00,000, and the calculator shows ₹31,92,308 removed by the cap.
Example 4 — measuring service. Joined 15 March 2016, leaving 20 October 2026: exact service is 10 years, 7 months and 5 days. The 7 months exceed 6, so the counted service is 11 years; at a salary of ₹60,000 the gratuity is ₹3,80,769.
5. Limits & Notes
This calculator implements the Payment of Gratuity Act, 1972 for India. Gratuity rules in other countries are different, and even within India an employer’s own gratuity scheme or a collective agreement can pay more than the Act requires — the Act sets a floor, not a ceiling on generosity, except for the ₹20 lakh statutory maximum on the Act’s own figure. From 21 November 2025, the Code on Social Security extends gratuity to fixed-term employees after one year of service, on a pro rata basis; permanent employees still need five years. The ₹20 lakh tax exemption is a lifetime limit across all employers, not a fresh allowance per job.
Three things the calculator does not do: it does not judge eligibility disputes (breaks in service, whether an establishment is covered, and seasonal-employment rules are matters for the controlling authority); it does not compute income tax (gratuity up to ₹20 lakh is exempt for employees covered by the Act, but individual tax positions vary); and it does not include interest on delayed payment, which the Act provides for separately.
If your service includes a break, a transfer between group companies, or a period of leave without pay, check with your employer or a labour adviser before treating the figure as final — the calculator counts continuous calendar service from the joining date you enter.
7. Frequently Asked Questions
What is gratuity?
Gratuity is a lump sum an employer must pay an employee on leaving service, under India’s Payment of Gratuity Act, 1972. It rewards long, continuous service and is paid on retirement, resignation or termination, and to the nominee on death.
Who is eligible for gratuity?
Generally, an employee who has completed 5 years of continuous service with the same employer. The 5-year condition does not apply on death or disablement, where gratuity is payable regardless of service length. From 21 November 2025, fixed-term employees qualify after one year on a pro rata basis under the Code on Social Security.
How is gratuity calculated?
Gratuity = (15 ÷ 26) × last drawn monthly salary × years of service. The salary is basic pay plus dearness allowance. The fraction 15/26 is 15 days’ wages per year, with a month counted as 26 working days.
What salary figure should I enter?
Your last drawn monthly salary: basic pay plus dearness allowance in the final month of service. Do not include house rent allowance or other allowances, and do not use gross salary.
How are part-years of service counted?
Service is counted in completed years, and if the remainder beyond completed years exceeds 6 months, it counts as a full year. So 22 years and 8 months counts as 23 years, while 22 years and 5 months counts as 22 years.
Is there a maximum gratuity amount?
Yes. Under the 2018 amendment, gratuity under the Act cannot exceed ₹20,00,000. If the formula produces more, the payable figure is ₹20 lakh, and this calculator shows the before-cap amount so you can see the difference.
Is gratuity taxable?
For employees covered by the Payment of Gratuity Act, gratuity up to ₹20 lakh is exempt from income tax. Tax treatment can differ for employees not covered by the Act, so check your own position if that applies to you.
What if my service is under 5 years?
Gratuity is generally not payable below 5 years of continuous service, except on death or disablement, and — from 21 November 2025 — for fixed-term employees after one year on a pro rata basis. This calculator still shows the formula figure for short service, with an eligibility note, so you can see what the amount would be.
Does gratuity apply outside India?
No. This calculator implements India’s Payment of Gratuity Act. Other countries have different leaving-payment rules, and this tool should not be used for employment outside India.
Does my employer’s own scheme change the figure?
An employer’s scheme or agreement can pay more than the Act requires, but not less. If your employer offers a better formula, that figure governs; this calculator gives the statutory minimum under the Act.
Is this calculator free, and is my salary private?
Yes, it is free, and it runs entirely in your browser. Your salary and dates are never sent to a server or stored anywhere.
8. Methodology & Data Integrity
The formula, the 6-month rounding rule, the 5-year eligibility condition and the ₹20 lakh ceiling are all from the Payment of Gratuity Act, 1972, as amended in 2018. Service is measured by the calendar anniversary rule, the same completed-years logic this site uses for age calculations, with 29 February joining dates observed on 28 February in non-leap years.
Worked examples on this page were produced by the calculator’s own engine and checked by hand: ₹60,000 × 10 years = ₹3,46,154; ₹1,20,000 × 23 counted years = ₹15,92,308; ₹3,00,000 × 30 years = ₹51,92,308 before the cap, ₹20,00,000 payable. Figures are rounded to the nearest rupee.
This tool gives the statutory figure for the inputs entered. It is not legal advice, and it does not settle eligibility disputes, breaks in service, or employer-scheme variations. Where those apply, the figure should be confirmed with the employer or a labour adviser.
