WealthJot.ai
WealthJot.ai
🎁 Gratuity Calculator
Calculate gratuity payable under the Payment of Gratuity Act 1972

Gratuity: gratuity payable is ₹2.88 L, based on the entered inputs.

Formula

Gratuity = (15 × Last Drawn Monthly Salary × Years of Service) ÷ 26

Worked example
InputValue
Last Basic + DA (Monthly)₹50,000
Years of Service10 yr
Covered by Gratuity ActYes
Gratuity Payable₹2,88,462
Tax-Free Gratuity₹2,88,462
Taxable Gratuity₹0
Formula Used1
Gratuity per Year of Service₹28,846

How gratuity is calculated

Gratuity is a statutory thank-you from your employer for long service: after 5 years of continuous service (waived on death or disability), you’re entitled to a lump sum when you leave, resign, or retire. For establishments covered under the Payment of Gratuity Act 1972, the formula is fixed by law — which is exactly what the calculator runs.

Gratuity = (15 ÷ 26) × last drawn (basic + DA) × years of service
15 days’ wages for every completed year, on a 26-working-day month. Service of 6+ months in the final year rounds UP to a full year (7 years 7 months counts as 8).
ExampleLast drawn basic+DA ₹80,000/month, 12 years 8 months of service: years round up to 13, so gratuity = (15/26) × 80,000 × 13 ≈ ₹6 lakh. Since your last drawn salary drives the whole formula, late-career raises retroactively upgrade every year you’ve already served — one reason long tenures near a promotion are worth finishing.
Tax treatment is generous: for private-sector employees covered by the Act, gratuity is tax-free up to the least of the formula amount, the actual amount received, or the ₹20 lakh lifetime ceiling — and government employees are fully exempt. Anything above the exempt amount is taxed at slab as salary.
✓ You learnedGratuity ≈ 15 days of last-drawn basic+DA per year of service, payable after 5 years, tax-free up to ₹20 lakh (lifetime). Count it in your net worthOwnership value — what’s left after debts are subtracted from assets. once you cross year 5 — and remember the 6-month round-up rule when timing an exit.
FAQs
Do I get gratuity if I resign before 5 years?

Generally no — 5 years of continuous service is the eligibility threshold (several court rulings accept 4 years 240 days as satisfying it; death/disability waive it entirely). Notice-period time counts as service. If you’re at 4.5 years and gratuity is meaningful money, the last few months are usually worth staying for.

Is gratuity part of my CTC?

Many employers provision ~4.81% of basic (the actuarial cost of the formula) inside your CTC — which is legal but means “CTC” overstates your cash salary. Whether it appears in CTC or not, the payout entitlement and the formula are identical; check your offer letter so you value the package correctly.