Gratuity Calculator
Calculate your gratuity amount as per the Payment of Gratuity Act. Free online gratuity calculator for India with instant results.
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Gratuity Breakdown
Total Service Period
11 Years
(10y 6m actual)Gratuity Amount
₹3,17,308
Tax-Free Amount
₹3,17,308
Gratuity Calculation Formula
Gratuity = (Last Salary × 15 × Years of Service) / 26
= (₹50,000 × 15 × 11) / 26 = ₹3,17,308
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What is Gratuity?
Gratuity is a monetary benefit given by an employer to an employee for the services rendered during the period of employment. It is governed by the Payment of Gratuity Act, 1972 in India. Gratuity is paid when an employee completes at least 5 years of continuous service with the employer.
This benefit is a token of appreciation from the employer and is separate from other retirement benefits like provident fund or pension.
Gratuity Calculation Formula
For employees covered under the Payment of Gratuity Act:
Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26
- Last Drawn Salary = Basic Salary + Dearness Allowance
- 15 = Days of salary for each year
- 26 = Working days in a month
For employees NOT covered under the Act:
Gratuity = (Last Drawn Salary × 15 × Years of Service) / 30
Eligibility for Gratuity
- Minimum Service: 5 years of continuous service (4 years for employees with disability)
- Company Size: Act applies to establishments with 10+ employees
- Events: Paid on retirement, resignation, death, or disablement
- Calculation: Service period of 6+ months is rounded up to 1 year
Gratuity Tax Rules
| Employee Type | Tax-Free Limit |
|---|---|
| Government Employees | Fully exempt |
| Private Sector (Covered under Act) | Up to ₹20 lakh |
| Private Sector (Not under Act) | Lower of actual, ₹20 lakh, or half month salary for each year |
Example Gratuity Calculation
- Last Drawn Basic + DA: ₹60,000/month
- Years of Service: 15 years
- Gratuity: (60,000 × 15 × 15) / 26 = ₹5,19,231
Frequently Asked Questions
Disclaimer
This calculator is provided for informational purposes only. The results are estimates and should not be considered as financial advice. Actual values may vary based on various factors. Please consult a certified financial advisor before making any financial decisions.
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