Gratuity Calculator
Estimate the gratuity amount you are entitled to receive from your employer at the time of retirement or resignation.
Calculation Details
Include Basic Salary and Dearness Allowance only.
Minimum 5 years required for eligibility.
Eligibility Rule
Generally, an employee is eligible for gratuity only after completing 5 years of continuous service with the same employer.
How it's Calculated
The Formula
Covered under Act
Applies to organizations with 10 or more employees. A month is considered as 26 working days.
Not Covered
Applies to other organizations. A month is considered as 30 calendar days for calculation.
Understanding Gratuity in India
Gratuity is a monetary benefit given by an employer to an employee in recognition of their long-term service to the organization. It is governed by the Payment of Gratuity Act, 1972.
Eligibility Criteria
- 5 Years Rule: You must have completed at least 5 years of continuous service with the same employer.
- Exceptions: The 5-year rule is waived in case of death or disablement of the employee.
- Last Drawn Salary: Calculation is based on your last drawn Basic Salary + Dearness Allowance (DA).
Taxation of Gratuity
For government employees, the entire gratuity amount is tax-free. For private-sector employees, the least of the following is exempt from tax:
- Actual gratuity received
- Statutory limit of ₹20,00,000
- 15 days' salary for every completed year of service
Frequently Asked Questions
Is gratuity calculated on CTC or Basic Salary?
Gratuity is calculated only on your Basic Salary and Dearness Allowance (DA). Other components of your CTC like HRA, Special Allowance, or Bonus are not included.
What happens if I leave before 5 years?
If you resign or leave before completing 5 years of continuous service, you are generally not entitled to receive any gratuity, unless it's a case of death or permanent disability.
How are months rounded off in tenure?
If you have served for more than 6 months in your final year, it is rounded off to the next full year. For example, 5 years and 7 months is treated as 6 years.
Is gratuity paid on top of the salary?
Yes, gratuity is a separate benefit paid at the time of leaving the organization (retirement, resignation, or termination) and is not part of your monthly take-home pay.