How to use this Gratuity calculator
Gratuity is a lump-sum reward for long service, paid by employers under the Payment of Gratuity Act once you complete five continuous years. Many employees forget it exists until they resign, then underestimate how much they have earned.
This calculator applies the statutory formula — fifteen days of last-drawn wages for every completed year — and handles the part-year rounding rule, giving you a realistic figure for resignation, retirement or job-switch planning.
The statutory formula
For employers covered by the Act, gratuity equals (last drawn monthly basic + DA) × 15 ÷ 26 × number of completed years. The 26 represents working days in a month, so 15/26 is effectively half a month's pay per year.
Last-drawn salary means your most recent basic plus dearness allowance, not your gross or CTC.
The five-year rule and rounding
You must complete five years of continuous service to be eligible, except in cases of death or disablement. Below five years, no gratuity is payable.
A final part-year is counted as a full year only if it exceeds six months; six months or less is ignored. So 8 years and 7 months counts as 9 years, but 8 years and 5 months counts as 8.
Tax treatment
Gratuity received is tax-exempt up to a lifetime ceiling of ₹20 lakh for covered private-sector employees; amounts above that are added to taxable income.
Government employees generally receive their gratuity fully exempt.
Planning your exit
Because the formula rewards completed years and crosses thresholds at the six-month mark, timing a resignation a few weeks later can add a full year to your gratuity.
Use the estimate to compare staying versus leaving, then confirm the exact figure with your employer's settlement statement.