Gratuity Calculator
Estimate the gratuity amount payable at retirement or resignation based on your service duration.
What is Gratuity Calculator?
A gratuity calculator calculates statutory retirement gratuity payable by employers under the Payment of Gratuity Act, 1972 upon completing 5 or more years of continuous service.
Financial calculators are useful because they turn assumptions into numbers you can compare. Instead of guessing, you can test different values for amount, time horizon, expected rate, and goal requirements to understand how the final result changes before you commit.
How this calculator works
Gratuity = (15 × Last Drawn Basic Salary + DA × Completed Years of Service) / 26. Service exceeding 6 months in the final year is rounded up to the next full year.
Worked example
An employee with 10 years of service and last drawn basic salary of ₹78,000 receives (15 × 78000 × 10) / 26 = ₹4,50,000 tax-free gratuity.
Most common mistakes people make
- Using 30 days in the denominator instead of the statutory 26 working days mandated by law.
- Calculating gratuity on Gross CTC instead of strictly Basic Salary + Dearness Allowance (DA).
- Believing gratuity is payable before completing 5 continuous years (exceptions apply only for death or permanent disablement).
- Forgetting the statutory tax exemption ceiling of ₹20,00,000 under Section 10(10) of the Income Tax Act.
- Assuming contract workers without continuous employment qualify under standard establishment rules.
Frequently asked questions
Gratuity Calculator helps you estimate the likely result of a financial decision using standard formulas and the assumptions you enter for amount, rate, duration, and frequency.
The calculator applies the relevant financial formula to your inputs and shows a real-time estimate so you can compare different scenarios before making a decision.
It gives a practical estimate based on standard formulas and assumptions, but actual outcomes can vary with market performance, policy changes, fees, taxes, and changing personal circumstances.
Yes. These calculators are designed for quick planning and comparison, especially when you want to estimate future values, repayments, or coverage needs before locking in a financial choice.
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Disclaimer
Gratuity is governed by the Payment of Gratuity Act, 1972. Private employers may offer higher contractual gratuity than statutory minimums.