Gratuity Calculator
Calculate Gratuity in Seconds
Gratuity is a financial benefit given to employees who have worked consistently for the same company for at least five years. It is typically paid within 30 days as a lump payment when someone resigns, retires, becomes disabled or dies.
Regulated by the Payment of Gratuity Act (1972), it defines that any public or private organisation that employs ten or more people (exception of apprentices) is obliged to pay their employees for gratuities.
With PayrollRabbit, you can easily calculate gratuity amounts for employees covered under the Gratuity Act or those not covered. This free tool is perfect for HR professionals, payroll managers, and employees wanting to know the specific gratuity amount.
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Gratuity Calculation Results
Calculation Details
Act Coverage Details
Calculation Formula
Covered under Act: Gratuity = (Last Drawn Salary × 15 × Eligible Years) ÷ 26
Gratuity = (₹35000.00 × 15 × 0) ÷ 26 = ₹0.00
Step-by-Step Explainer
How to calculate gratuity in India?
Calculate your gratuity in 3 simple steps:
Enter Employment Details
Provide the employee's last drawn monthly salary, total years of service, and any additional months worked.
Select Act Coverage
Choose whether the employee is covered under the Payment of Gratuity Act, 1972. This determines which formula and limits are applied.
View Instant Calculation
Instantly see the calculated gratuity amount, complete with a detailed breakdown of the formula and any statutory limits.
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Frequently asked questions
Visit our full FAQ page or get in touch with Frederic, Co-Founder of PayrollRabbit.
- In India, gratuity is a lump sum payment paid from the employer to an employee as a sign of gratitude for the employee's loyalty to working at least 5 years continuously for the employer.
- According to Section 4(1) of The Payment of Gratuity Act, 1971, gratuity is paid within 30 days, provided it fulfills one of the three conditions: 1. The employee retires with eligibility to superannuation, 2. The employee resigns voluntarily after at least 5 years of service or 3 years. The employee becomes disabled or dies after completing at least 5 years.
- You can easily calculate gratuity using the following formula for employees covered under the Gratuity Act: 'Gratuity = ([tenure of service in years] * [dearness allowance + last drawn basic salary] * 15) / 26'. The formula for employees not covered under the Gratuity Act is the following: 'Gratuity = ([last drawn salary] * [tenure] * 15) / 30'
- If in the current year you have less than 6 months, you can ignore it in the gratuity calculation. If you have more than 6 months in the current year, you can count it as a full year. That means, if you have continuously worked more than 4 years and 6 months with the same employer, you become eligible for gratuity, as it is counted as 5 years.
- An Indian employer with 10 or more employees is obliged to cover gratuity under the Payment of Gratuity Act, 1972. Employers with less than 10 employees can offer gratuity, but are not legally required.
- Yes, gratuity is partially taxable. For government employees, it is completely exempt. Yet, for private sector employees covered under the Act, gratuity up to ₹20 lakhs is exempt. Any amount above this threshold is taxable as salary income.
What is gratuity?
When is gratuity paid?
How is gratuity calculated?
How do you calculate partial years in gratuity? Will you get gratuity after 4 years and 7 months?
Which employers are obliged to cover gratuity?
Is gratuity taxable?
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Disclaimer: We have taken great care and gave our best effort to ensure the accuracy of the information provided by this Gratuity Calculator. However, PayrollRabbit does not accept responsibility for any errors or omissions and makes no guarantees or warranties regarding the correctness of the results generated by this free tool. By using this tool, you agree not to hold PayrollRabbit liable for any consequences, issues, or damages arising from any inaccuracies in the results produced. We recommend double-checking all results and contact us if you have any questions, feedback or concerns.