Gratuity Calculator
You spent years building your career. Your employer owes you something in return. It is called gratuity. The Gratuity Calculator tells you exactly how much you will get. Enter your salary, years of service, and employer type. Get your number in seconds.
What is a Gratuity Calculator?
A Gratuity calculator is a free online tool. It helps you find out how much gratuity you will receive from your employer. You do not need to know any formula. You just enter three simple details, and the calculator does the rest. Here is what it helps you do:
It answers two important questions every working person has:
- Find your exact payout. Enter your last drawn salary and years of service to get your estimated gratuity amount instantly.
- Verify what you are owed. The tool uses the official gratuity calculation formula as per the Payment of Gratuity Act, 1972, so you always know your rights.
What Is Gratuity
Gratuity is a lump sum amount your employer pays you when you leave a job. It is a reward for your long service. It is governed by the Payment of Gratuity Act, 1972, and applies to organisations with 10 or more employees. Unlike your monthly salary or annual bonus, gratuity is a one-time payment that reflects the years you have invested in a company. It is paid out at the time of retirement, resignation, or superannuation, and in some cases, even earlier.
How to Use the Gratuity Calculator?
Using the Gratuity Calculator online on Shriram Life is quick and easy. Follow these four steps:
Step 01
Enter your last drawn monthly salary (Basic Pay + DA only, not your full CTC)
Step 02
Enter your total years of service with the same employer
Step 03
Select your employer type, either covered under the Payment of Gratuity Act or not covered
Step 04
Click Calculate to instantly see your estimated gratuity amount
What Are the Eligibility Criteria for Gratuity?
- You must have worked for at least 5 continuous years with the same employer
- Your employer must have 10 or more employees at any point in the last 12 months
- Gratuity is payable on retirement, resignation, superannuation, or termination
- In cases of death or permanent disability, the 5-year rule is fully waived
- Fixed-term contract employees are now eligible for gratuity after 1 year of service under the Code on Social Security, 2020 (effective November 2025)
- The maximum gratuity payable under the Act is capped at ₹20 lakh for private-sector employees
Also Discover:
Looking to secure your employees' gratuity benefits? Shriram Life New Group Gratuity Plan - a reliable way to fulfil your gratuity obligations while keeping your workforce protected.
Gratuity Calculation Formula
The gratuity calculation formula in India is set by law. It is the same for all private-sector employees covered under the Payment of Gratuity Act, 1972.
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
For employees not covered under the Act: A different formula applies: Gratuity = (Average Salary of Last 10 Months × ½ × Years of Service)
Here is what each part means:
| Symbol | What It Means |
|---|---|
| Last Drawn Salary | Basic Pay + Dearness Allowance (DA) only. HRA, bonus, and other allowances are not included. |
| 15 | 15 days of salary for every completed year of service |
| Years of Service | Total completed years. If you have served 6 or more months in the last year, it is rounded up to a full year. |
| 26 | Number of working days in a month (excluding Sundays) |
Benefits of a Gratuity Calculator
Knowing your gratuity before you retire or resign puts you in a much stronger position. You can plan your post-job finances, verify what your employer owes you, and avoid any unpleasant surprises. The Gratuity calculator makes this easy.
Instant Results
Get your estimated gratuity amount in seconds. No manual math needed.
Full Accuracy
The calculator uses the legal formula. Your results are always correct.
Plan Ahead
Know your retirement payout in advance and plan your next steps with clarity.
Try Any Scenario
Change salary or service years to see how different inputs affect your gratuity.
Did You Know?
Roughly 7 out of 10 working Indians depend on their children after retirement. Not because they didn't save, but because their savings didn't last. A Retirement plan helps turn today's savings into future income.
Factors Affecting Gratuity Amount
Your gratuity is not a fixed number. It changes based on three key inputs. Understanding each one helps you estimate your payout more accurately and also helps you plan your career decisions with more clarity.
Last Drawn Salary
Your last drawn salary is the single biggest factor. A higher basic salary means a higher gratuity. Remember, only Basic Pay and Dearness Allowance (DA) are counted. HRA, bonus, commissions, and other allowances are not included in the gratuity base.
Years of Service
The more years you serve, the more gratuity you earn. Every extra year adds to your payout. Also, if you have completed 6 or more months in your final year of service, that year is counted as a full year in the calculation.
Employer Type
Your employer type determines which formula is used. Employers covered under the Payment of Gratuity Act use the 15/26 formula. Employers not covered under the Act use a different formula based on the average of your last 10 months' salary. The difference can affect your final amount.
How is gratuity calculated: A Simple Example
Let us look at a simple example to understand how the gratuity calculation in India works.
Suppose an employee named Ramesh has worked at a private company for 20 years. His last drawn basic salary plus DA is ₹35,000 per month. His employer is covered under the Payment of Gratuity Act.
Using the formula: Gratuity = (35,000 × 15 × 20) ÷ 26
| Detail | Value |
|---|---|
| Last Drawn Salary (Basic + DA) | ₹35,000 per month |
| Years of Service | 20 years |
| Gratuity Formula | (35,000 × 15 × 20) ÷ 26 |
| Estimated Gratuity Amount | ₹4,03,846 |
In this case, Ramesh's estimated gratuity is approximately ₹4.04 lakh. This amount is fully tax-free since it is well below the ₹20 lakh tax exemption limit for private-sector employees.
Note: Results are estimates based on the formula under the Payment of Gratuity Act, 1972. Actual amounts may vary based on employer policy.
What Are the Tax Rules for Gratuity in India?
Gratuity comes with useful tax benefits. But the exact tax treatment depends on your employer type.
Here is a quick breakdown:
- Government employees: The full gratuity amount is tax-exempt, up to ₹25 lakh, as per the Income Tax Act
- Private-sector employees (covered under the Act): Gratuity is tax-exempt up to ₹20 lakh under Section 10(10) of the Income Tax Act
- Private-sector employees (not covered under the Act): Exemption is the lowest of three amounts: actual gratuity received, half a month's average salary per year of service, or ₹20 lakh
- If gratuity exceeds the exemption limit: The amount above the limit is added to your taxable income and taxed as per your slab
- The ₹20 lakh exemption applies to the total gratuity received across your entire working life, not per employer
Tax rules are as per the Income Tax Act, 1961, and are subject to change. Please consult a tax advisor for personalised guidance.
How to Use Gratuity for Retirement Planning
Gratuity is often one of the largest lump sum payments you receive at the end of your career. Used well, it can give your retirement finances a solid head start.
Here is how to make the most of it:
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FAQs on Gratuity Calculator
What is the gratuity calculation formula in India?
The formula is: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26. Last drawn salary includes only Basic Pay and Dearness Allowance. This formula applies to employees covered under the Payment of Gratuity Act, 1972.
How many years of service are needed for gratuity?
You need at least 5 years of continuous service with the same employer. For fixed-term employees, the limit is now 1 year of service under the Code on Social Security, 2020. For death or permanent disability, there is no minimum service requirement.
Is gratuity taxable in India?
Gratuity is tax-free up to ₹20 lakh for private-sector employees under Section 10(10) of the Income Tax Act. For government employees, the exemption limit is ₹25 lakh. Any amount above the exemption limit is taxable as per your income slab.
What salary is considered for gratuity calculation?
Only your Basic Salary + Dearness Allowance (DA) are used for gratuity calculation. HRA, bonus, commissions, and other allowances are not counted.
What is the maximum gratuity amount payable?
The maximum gratuity payable under the Payment of Gratuity Act is ₹20 lakh. An employer may pay more than this as ex-gratia, but the tax exemption under the Income Tax Act is limited to ₹20 lakh over your entire working life.
Can I receive gratuity if I resign?
Yes. If you have completed at least 5 years of continuous service, you are eligible for gratuity even if you resign.
Why is 26 used in the gratuity formula?
26 represents the average number of working days in a month, excluding Sundays. The formula gives you 15 days of salary for every completed year of service, calculated on actual working days.
Is the Gratuity Calculator on Shriram Life free to use?
Yes. The Gratuity calculator on Shriram Life is completely free. No login is needed. You can use it as many times as you like with different inputs.
