Learn before you calculate
Gratuity Calculator: a practical India guide
Estimate gratuity using last drawn salary, service duration, organisation coverage and reason for leaving. The output is a planning figure; employment category, current law and employer records determine actual eligibility and payment.
Educational estimates, not financial, tax or legal advice
Quick answer
A common statutory estimate for a covered establishment is last drawn eligible wages × 15 ÷ 26 × completed years of service, subject to eligibility, rounding and the notified ceiling. Other cases can follow different rules.
How to use this calculator well
- 1Enter the last drawn salary component relevant to the gratuity formula, usually eligible basic wages plus dearness allowance where applicable.
- 2Choose whether the establishment is covered by the applicable gratuity law or uses another policy basis.
- 3Enter completed years and additional months or days of service from employer records.
- 4Select the reason employment ended because death, disablement and fixed-term cases can have different eligibility treatment.
- 5Review the estimate and confirm the result with HR, the governing law and current notified ceiling.
Formula and method
Common covered-establishment formula
Gratuity = Eligible last drawn wages × 15 ÷ 26 × completed years of service
Eligibility, what counts as wages, rounding of part-years, establishment coverage, fixed-term employment, death or disablement, forfeiture and statutory ceiling can change the actual amount.
What counts in a gratuity calculation
Gratuity is linked to eligible last drawn wages and service, not automatically to gross salary or cost to company. Basic wages and dearness allowance are commonly relevant under statutory calculations, while bonus, overtime and many allowances are generally treated differently.
Use the figure supported by the payslip and employment records. An inflated salary input produces an unrealistic estimate even when the formula itself is correct.
Eligibility after resignation, retirement or termination
Under the traditional Payment of Gratuity framework, continuous service and establishment coverage are central. Official labour guidance has also introduced specific treatment for fixed-term employees under the social-security framework. Death and disablement can remove the usual minimum-service condition.
Because commencement rules, worker category and state or establishment facts matter, use the calculator as a first estimate and verify the current rule that applies on the date gratuity becomes payable.
Completed service and part-year rounding
A common statutory method counts a part of a year above the prescribed threshold as a completed year for the amount calculation. That should not be confused with the separate question of meeting the minimum continuous-service requirement.
Disputes around four years plus additional days are fact-sensitive and have been addressed differently in legal contexts. Do not rely on a generic internet shortcut when actual eligibility is contested.
Ceiling, tax and employer payment
Statutory gratuity can be subject to a government-notified maximum, while an employer may provide a more beneficial contractual benefit. Tax exemption has its own conditions and limits and is not identical to the amount the employer owes.
Official guidance also prescribes timelines and processes for determination and payment. Keep appointment, salary, attendance, nomination and separation documents if the service record or amount may be questioned.
Questions people ask
Gratuity Calculator FAQs
Concise answers to common planning questions. Open any question for the full explanation.
How is gratuity calculated in India?
For many covered establishments, a common estimate is eligible last drawn wages × 15 ÷ 26 × completed years. The actual rule depends on coverage, service and current law.
Is gratuity calculated on basic salary or gross salary?
Statutory calculations commonly use eligible wages such as basic plus dearness allowance, not full CTC or every allowance. Check the law and employment terms that apply.
Do I get gratuity if I resign?
Resignation can qualify when the applicable continuous-service requirement and other conditions are met. Resignation itself does not automatically cancel gratuity.
Is five years of service always mandatory?
Not in every case. Death and disablement have special treatment, and official current guidance includes separate rules for eligible fixed-term employees. Verify your category.
Does six months round up to a full year?
A part-year above the prescribed threshold may be counted as a completed year for the amount formula. This is separate from establishing basic eligibility.
Is 4 years and 240 days enough for gratuity?
This question is fact- and jurisdiction-sensitive and should not be answered by a blanket calculator rule. Obtain HR or legal guidance using your work pattern and applicable law.
Is gratuity payable on termination?
It can be payable when eligibility is met, but the law permits forfeiture in limited specified circumstances. Ordinary termination does not automatically mean forfeiture.
What happens in case of death or disablement?
The usual minimum-service condition may not apply, and payment can be made to the nominee or legal heir as prescribed. Employer and legal documentation is important.
What is the maximum gratuity amount?
A statutory ceiling may be notified by the government and can change. An employer can have a more beneficial policy. Confirm the current ceiling on the payment date.
Is gratuity tax-free?
Tax exemption depends on employee category, amount, statutory entitlement and current tax rules. The full employer payment is not automatically exempt in every case.
Can an employer pay more than the statutory formula?
Yes, a contract, award or company policy may provide a more beneficial gratuity. The statutory formula generally sets a minimum framework where applicable.
Why might HR calculate a different amount?
Differences can come from salary definition, service dates, rounding, establishment coverage, ceiling, policy benefits or legal category. Ask for the written calculation.