Leaving your job after several years of service? You might be entitled to a significant lump-sum payment called gratuity. Our Free Gratuity Calculator helps you estimate this amount accurately as per the Indian Labor Law. Simply enter your last drawn salary and your total period of service to get an instant calculation of your rightful benefit.

How to Use the Gratuity Calculator

Calculating your gratuity estimate is a simple 3-step process:

1. Enter Your Salary: In the first field, enter your last drawn monthly salary. This should be your Basic Salary + Dearness Allowance (DA).
2. Enter Service Period: Enter your total tenure with the company in years and months.
3. Click Calculate: Hit the "Calculate Gratuity" button to see your estimated amount.

What is Gratuity and How is it Calculated?

Gratuity is a monetary benefit given by an employer to an employee as a sign of gratitude for their long-term service. It is a mandatory statutory benefit in India, governed by the Payment of Gratuity Act, 1972.

How It Works: The Gratuity Formula

The calculation is based on a specific formula laid out in the law:

Gratuity = (Last Drawn Salary × 15/26) × Number of Years of Service

Here's a breakdown of each component:

• Last Drawn Salary: This is defined as your Basic Salary plus any Dearness Allowance (DA). It does not include other components like HRA or special allowances.
• 15/26: This represents 15 days' salary for a month with 26 working days (the law excludes the 4 weekly off days).
• Number of Years of Service: For calculation purposes, if your service in the final year is more than six months, it is rounded up to the next full year. For example, 7 years and 7 months is counted as 8 years.

Frequently Asked Questions (FAQ)

Q1: Who is eligible to receive gratuity?

Answer: An employee is eligible for gratuity after completing a minimum of five years of continuous service with the same employer. The law applies to organizations with 10 or more employees.

Q2: What is the maximum amount of gratuity I can receive?

Answer: As per the Payment of Gratuity Act, the maximum amount of gratuity that can be paid to an employee is ₹20 lakhs. Any amount calculated beyond this will be capped at this statutory limit. Our calculator automatically applies this cap.

Q3: Do I enter my take-home salary or just the basic salary?

Answer: This is a very important point. For the gratuity calculation, you must enter your last drawn salary defined as your **Basic Salary + Dearness Allowance (DA)**. Using your gross or take-home salary will lead to an incorrect calculation.