Gratuity Calculator
A gratuity calculator helps you estimate the gratuity amount you may receive from your employer at the end of your service. In India, gratuity is a statutory benefit paid to eligible employees as a recognition of long and continuous service.
The amount shown represents the gratuity payable based on your last drawn monthly salary and total years of service, following the standard formula prescribed under the Payment of Gratuity Act, 1972.
How the Calculation Works
Under the Payment of Gratuity Act, gratuity is calculated using your last drawn salary and the number of completed years of service. The law assumes that an employee is paid for 26 working days in a month, and gratuity is paid for 15 days’ salary for every completed year of service.
This calculator applies that rule directly. If the employee does not meet the minimum eligibility requirement, the gratuity amount is shown as zero.
- Salary considered is Basic + Dearness Allowance (DA)
- Gratuity is paid for completed years of service only
- Eligibility requires at least five years of service
- The statutory formula is applied without modification
Eligibility and Scope
Gratuity is payable only if certain conditions are met. This calculator assumes that you are covered under the Payment of Gratuity Act, 1972, which applies to most salaried employees in organised establishments.
If your years of service are less than five, gratuity is not payable under normal circumstances, and the calculator therefore returns a value of zero.
Inputs and Options Explained
The calculator requires only two inputs, both of which are used directly in the statutory formula.
- Last Drawn Monthly Salary — Your final monthly Basic + DA at the time of leaving the organisation.
- Years of Service — The total number of completed years you have worked with the employer.
Understanding the Result
Gratuity is not a recurring benefit and does not grow through compounding. It is a one-time lump sum paid at the end of service, based purely on salary and tenure.
Because gratuity depends on your last drawn salary, salary growth towards the later years of service has a greater impact on the final amount than early-career increases.
Who Should Use This Tool
This calculator is useful for understanding end-of-service benefits and planning long-term employment-linked savings.
- Salaried employees planning job changes or retirement
- Professionals estimating statutory benefits
- Anyone reviewing long-term employment benefits
Related Concepts
Gratuity is often discussed alongside other long-term and statutory savings instruments.
- EPF — A recurring retirement savings scheme based on monthly contributions.
- Retirement Corpus — The total savings accumulated for post-employment life.
- Statutory Benefits — Benefits mandated by law rather than employer discretion.
To estimate other retirement-related benefits, you can also use an EPF Calculator or understand the real value of long-term benefits with an Inflation Calculator.