Retirement planning

Years of loyal work, a thank-you in rupees.Gratuity calculator: what you may get after 5 or more years of service.

Gratuity is a lump sum your employer pays when you leave, usually after 5 years or more of continuous service. Enter your last monthly salary and your years of service to see how much it may be. The result is an illustration based on what you enter.

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Gratuity calculator

Gratuity–
Each year of service adds–

For employees covered by the Payment of Gratuity Act. Your employer’s rules and tax limits apply.

How to use the gratuity calculator

  1. Enter your last monthly salary: your basic pay plus DA. Your payslip shows both.
  2. Enter your years of service with the same employer. A part-year of more than six months counts as a full year.
  3. See the gratuity amount. Change the years to see what staying longer could add.

How to read your result

Gratuity amount is the lump sum you may get when you leave. For example, with a last salary of ₹40,000 and 20 years of service, it comes to about ₹4,61,538. If you had worked 20 years and 7 months, that counts as 21 years, and the gratuity would be about ₹4,84,615.

Not every employer is covered by the Act, and some pay more under their own rules. Government employees have separate rules, and the Act also sets a maximum amount. Your HR team can confirm what applies to you.

Gratuity often arrives at retirement along with your EPF. Plan where that lump sum will go before it lands. Try the EPF calculator, and see how we approach retirement planning.

How the gratuity calculator works

For employees covered by the Payment of Gratuity Act, gratuity is 15 days’ salary for each year of service, counting 26 working days in a month. That’s why the formula multiplies by 15 and divides by 26.

Gratuity = 15 × last monthly salary (basic + DA) × years of service ÷ 26

FAQ

Common questions

What is a gratuity calculator?
A gratuity calculator estimates the lump sum your employer may pay when you leave a job, based on your last salary and years of service.
Who gets gratuity?
Usually employees who have completed 5 years of continuous service with an employer covered by the Payment of Gratuity Act. In case of death or disability, the 5-year condition doesn’t apply. Check with your HR team for your case.
What counts as salary for gratuity?
Your last drawn basic pay plus dearness allowance (DA). Other allowances and bonuses usually aren’t counted.
Is gratuity taxable?
Gratuity is tax-free up to a limit set by the government, and the rules differ for government and private employees. Any amount above the limit is taxed, depending on your income and whether you choose the old or new tax regime. Tax rules change, so check the current limit with your CA.
Does a part-year count?
Under the Act, a part-year of more than six months counts as a full year. So 9 years and 7 months counts as 10 years, while 9 years and 5 months counts as 9.

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