Gratuity Calculator
This Gratuity Calculator helps employees estimate the gratuity amount payable under the Payment of Gratuity Act, 1972. It is designed for employees working in India who are eligible for gratuity benefits after completing a minimum service period.
Enter your last drawn basic salary plus dearness allowance and total years of service to calculate the estimated gratuity amount along with tax exemption and taxable gratuity details.
How the Financial Goal Planner Works
- Enter your target financial goal amount.
- Select the investment period in years.
- Provide the expected annual return rate.
- Add any existing investment amount (optional).
- The calculator estimates the required monthly SIP.
Who Is Eligible for Gratuity in India
As per the Payment of Gratuity Act, 1972, gratuity is payable to an employee who has completed at least five years of continuous service with an organization.
- Applicable to employees working in organizations with 10 or more employees
- Minimum service period of 5 years is required
- Service exceeding 6 months is rounded to the next full year
Gratuity Calculator
Estimate gratuity for employees covered under the Payment of Gratuity Act, 1972.
*Service period is rounded up to the next full year if it exceeds 6 months.
Gratuity Calculation Formula
Under the Payment of Gratuity Act, gratuity is calculated using the following standard formula:
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
Where:
- Last Drawn Salary = Basic salary + Dearness Allowance
- 15 = Number of days’ wages for each completed year
- 26 = Number of working days in a month
Gratuity Tax Exemption Rules
Gratuity received by employees is tax-exempt up to a maximum limit as defined by the Government of India. As per current rules, the maximum tax-exempt gratuity limit is ₹20,00,000.
- If gratuity received is within the exemption limit, no tax is payable
- Any amount above the exemption limit becomes taxable
- Actual taxability depends on employee type and employer policies
Why Use This Gratuity Calculator
This gratuity calculator helps employees understand their retirement or exit benefits in advance. It provides clarity on gratuity eligibility, estimated payout, and tax implications.
It is useful for salaried employees, HR professionals, and financial planners to quickly estimate gratuity benefits without manual calculations.
Important Notes
This Gratuity Calculator provides an estimate based on the Payment of Gratuity Act, 1972, and user-provided inputs. Actual gratuity payable may vary depending on company policies, employment terms, and future legal amendments. This tool is for informational purposes only and should not be considered legal or financial advice.