What is a Gratuity Calculator?
A gratuity calculator helps you estimate the gratuity amount you are eligible for when you leave a job, based on the number of years you've worked, your last drawn basic salary, and applicable laws.
How is gratuity calculated?
Gratuity is calculated using the following formula:
Gratuity = (15 × last drawn basic salary × years of service) ÷ 26
- 15 = Number of days' salary for each completed year
- 26 = Number of working days in a month
Who is eligible for gratuity?
To be eligible:
- You must have completed 5 or more years of continuous service with the same employer.
- Gratuity is applicable under the Payment of Gratuity Act, 1972 in India
What is considered basic salary?
Basic salary includes:
- Basic Pay
- Dearness Allowance (if any)
Other allowances like HRA, bonuses, etc., are not included in gratuity calculation.
Is gratuity taxable?
Gratuity received under the Payment of Gratuity Act is tax-exempt up to ₹20 lakh.
Amounts beyond this are taxable as per your income slab.
Is it applicable for private-sector employees?
Yes, private-sector employees are eligible for gratuity if:
- Their employer is covered under the Gratuity Act.
- They've completed 5 years of continuous service.
Can contract employees get gratuity?
Only if:
- They are employed directly by the company and not by a third-party agency.
- They meet the 5-year continuous service criteria.
Does part-time or internship period count?
Generally, no. Only full-time continuous employment is counted for gratuity eligibility
What happens if I resign before 5 years?
You are not eligible for gratuity unless:
- The employer has a voluntary gratuity scheme.
- Your region/state has specific provisions (e.g., Madras High Court ruling on 4 years and 240 days in some cases).
Is my gratuity amount safe?
Yes. Employers are legally required to pay gratuity within 30 days of termination. Delay may attract interest penalties.
Can I use this calculator for any country?
No. This calculator is based on Indian labor laws, specifically the Payment of Gratuity Act, 1972. It may not be valid for other countries.