Gratuity Calculator

Monthly salary (Basic + DA)₹

Years of serviceyr

Total Gratuity payable

₹6,92,308

Gratuity Calculator

Gratuity is a financial benefit provided by an employer to an employee for rendering services continuously for five years or more. It is a lump sum amount paid to an employee as a token of appreciation for their loyalty and service.

How is Gratuity Calculated?

The formula to calculate gratuity is straightforward. For every completed year of service (or part thereof in excess of six months), the employer pays gratuity at the rate of 15 days' wages based on the rate of wages last drawn by the employee.

Formula: (15 × Last Drawn Monthly Salary × Tenure of Working) / 26

Here, the monthly salary includes your Basic Salary plus Dearness Allowance (DA). The number of working days in a month is considered 26 for gratuity calculation.

FAQ

Who is eligible for Gratuity?

An employee who has completed at least 5 years of continuous service with the same employer is eligible to receive gratuity. This condition is relaxed in case of death or disablement of the employee.

Is Gratuity taxable?

Gratuity received up to ₹20 lakhs is completely tax-free for all employees covered under the Payment of Gratuity Act, 1972.

What constitutes the 'Monthly Salary' for calculation?

For the purpose of calculating gratuity, the salary includes only the Basic Salary and the Dearness Allowance (DA). Other allowances like HRA, LTA, etc., are excluded.