Gratuity Calculator

Knowing what gratuity you are owed

Gratuity is a lump sum your employer pays when you leave after long service, retire, or in some cases due to death or disability. For employers covered by the Payment of Gratuity Act, the formula is 15 days of your last drawn basic pay plus dearness allowance for every completed year of service, with a month counted as 26 working days. In practice that means fifteen twenty-sixths of your monthly basic, multiplied by your years of service.

How service is counted matters. Under the Act, a final part-year of more than six months is rounded up to a full year. So seven years and seven months counts as eight years. With a last drawn basic plus DA of ₹50,000, gratuity would be about ₹2.31 lakh. Leaving a few weeks too early can cost you a full year in the calculation, so check your dates before deciding when to resign.

Most employees become eligible after five years of continuous service, although the condition does not apply in cases of death or disability. If your employer is not covered by the Act, gratuity may still be paid under company policy, often using a 30-day month, which gives a slightly lower figure; the calculator includes that option. Gratuity received by private-sector employees is tax-free up to a limit set under tax law, and anything above it is added to your income. Keep your appointment letter and salary slips safe, since they are the evidence you need if there is ever a disagreement. Gratuity should be paid within thirty days of becoming due, and delays can attract interest.