Gratuity Calculator

Gratuity = (Last Drawn Monthly Salary × 15 × Number of Years of Service) ÷ 26, for employees covered under the Payment of Gratuity Act. Salary here typically means basic pay plus dearness allowance.

Generally, employees who've completed 5 or more years of continuous service with the same employer are eligible, with some exceptions (such as death or disablement, where the 5-year condition doesn't apply).

Yes — the Payment of Gratuity Act sets a statutory ceiling on tax-exempt gratuity, which the government revises periodically. Check the current limit before treating this calculator's output as a final, capped figure.

Under the Act, a period of service of more than 6 months past a completed year is typically rounded up to the next full year. So 7 years 8 months would usually be treated as 8 years for the calculation.

The Payment of Gratuity Act covers every factory, mine, oilfield, plantation, port and railway company, and every shop or other establishment that employs 10 or more people, or did on any day in the previous 12 months. Once covered, an employer stays covered even if headcount later falls below 10. Smaller employers can still pay gratuity voluntarily or under an employment contract.

Under the Payment of Gratuity Act, enter the last monthly salary drawn before leaving, counting only basic pay and dearness allowance. Leave out HRA, conveyance, special allowance, bonus, commission and overtime. Your payslip usually shows basic and DA as separate lines, so add just those two. If your company does not pay DA, enter basic pay alone.

Employers outside the Act are not bound by its formula. When they do pay gratuity, the tax-exempt part is commonly worked out as half a month's average salary for each completed year, which means a divisor of 30 instead of 26 and no rounding up of part years. This calculator uses the Act's 26-day formula, so it will show a higher figure for that case.

Under the Act, the employer must work out the gratuity and pay it within 30 days of it becoming payable, which is when employment ends. If payment is late, simple interest is due on the amount for the period of delay. An employee who is not paid can apply to the controlling authority appointed under the Act.