Gratuity Calculator

What is Gratuity?

Gratuity is a lump-sum monetary benefit paid by an employer to an employee as a token of appreciation for long-term service. In India, gratuity is governed by the Payment of Gratuity Act, 1972.

An employee becomes eligible for gratuity after completing at least 5 years of continuous service with the same employer.

How is Gratuity Calculated?

Gratuity calculation is based on the employee’s last drawn salary and years of service.

Gratuity Formula:

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

Why Use This Gratuity Calculator?

• Instant & accurate calculation
• No manual formula needed
• Useful for retirement planning
• Ideal for employees & HR teams

Who is Eligible for Gratuity?

• Private sector employees
• Government employees
• PSU employees
• Factory & shop workers

Is Gratuity Taxable?

Gratuity received by government employees is fully tax-exempt. For private employees, tax exemption applies up to limits prescribed under the Income Tax Act.

Gratuity in India – Important Points

• Minimum 5 years service required
• Payable on resignation, retirement, death, or disablement
• Calculated on Basic + DA only

Frequently Asked Questions

Is 4 years 240 days considered for gratuity?

In some cases, courts have considered 4 years and 240 days as eligible, but official eligibility remains 5 years.

Can employer refuse gratuity?

No. If eligible, gratuity payment is mandatory by law.

Is gratuity applicable for contract employees?

Yes, if they meet eligibility criteria.