Gratuity Calculator
Gratuity Calculator – Calculate Your Gratuity Amount Online
Use this free online Gratuity Calculator to estimate the amount you are eligible to receive upon resignation, retirement, or termination. The calculator works for both private and government sector employees, following the rules of the Payment of Gratuity Act, 1972. Just enter your monthly basic salary, dearness allowance (DA), and completed years of service to get an instant calculation.
How to Use the Gratuity Calculator?
- Select the applicable scenario: Resignation, Retirement, or Termination.
- Enter your monthly basic pay and dearness allowance.
- Input the total number of years you’ve completed in service. Decimal values are allowed (e.g., 9.5 years). If you have completed 6 months in an organization, count that as 1 complete year. For example, 8 years and 5 months will be counted as 8 years.
- Select your organization type – Government, Private (Covered), or Private (Not Covered).
- Optionally, enter the expected annual salary growth rate to project future gratuity value.
Features of the Calculator
- Instant real-time calculation
- Works for government and private sector employees
- Supports partial years of service (e.g., 9.5 years)
- Projection with future salary growth option
- Mobile-friendly and easy to use
What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for long-term service. It is governed by the Payment of Gratuity Act, 1972. Gratuity becomes payable when an employee leaves an organization after completing at least 5 years of continuous service, under resignation, retirement, or death/disability.
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Eligibility Criteria for Payment of Gratuity
- Minimum 5 years of continuous service with the same employer
- Payable on resignation, retirement, superannuation, or termination (in certain cases)
- In case of death or disablement, the 5-year rule is waived
Formula Used for Gratuity Calculation
The gratuity is calculated using the following formula under the Gratuity Act:
Gratuity = (Basic Salary + DA) × 15 × Completed Years of Service ÷ 26
Here, 15 is the number of days’ salary for each completed year, and 26 is the average number of working days in a month.
Example of Gratuity Calculation
If your basic salary is ₹40,000 and DA is ₹5,000, and you’ve completed 10 years of service:
Gratuity = (40000 + 5000) × 15 × 10 ÷ 26 = ₹2,88,461.54
Where Can You Invest Your Gratuity Amount?
- Public Provident Fund (PPF): Safe, tax-saving option with long-term returns
- Fixed Deposits (FDs): Stable and predictable returns
- Mutual Funds: Higher return potential over the long term
- National Pension System (NPS): Helps build a retirement corpus
- Senior Citizens Saving Scheme (SCSS): For retirees aged 60 and above
Limitations of the Calculator
- Does not account for tax deductions (gratuity is tax-free up to ₹20 lakhs under current rules)
- Actual gratuity may vary based on company policy or specific legal interpretations
- Projected values depend on the assumed salary growth, which may differ in reality
FAQs – Frequently Asked Questions
1. Is gratuity taxable in India?
Gratuity is tax-free up to ₹20 lakhs for private sector employees covered under the Gratuity Act. For government employees, it is fully tax-free.
2. Can I receive gratuity if I resign before 5 years?
No, gratuity is generally payable only after completing 5 years of continuous service, unless the employee dies or becomes disabled.
3. Is the number of months considered in the gratuity calculation?
Yes. If you have completed more than 6 months in a particular year, it is rounded up. For example, 9 years and 7 months is treated as 10 years.
4. Can gratuity be part of CTC?
Yes, many employers include an estimated gratuity amount as part of the total CTC (Cost to Company).
5. Is gratuity available in the case of contract jobs?
Only if the employee qualifies as a full-time employee under the Gratuity Act and meets the service criteria.
Why Use This Gratuity Calculator?
- Understand your end-of-service benefits better
- Plan your retirement or resignation more effectively
- Make informed decisions about post-service investments
- Estimate your gratuity without relying on HR
Use this Gratuity Calculator to take control of your financial future. Whether you’re planning for retirement or considering a job switch, knowing your gratuity amount helps you make better decisions.