Gratuity
Gratuity calculator for salaried employees
Estimate gratuity using last drawn basic salary plus DA and completed years of service.
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Standard gratuity estimate
For monthly-rated employees, gratuity is commonly estimated as 15 days' wages for every completed year of service.
Gratuity = Last drawn wages x 15 x years / 26
FAQ
What is gratuity?
Gratuity is a benefit paid by an employer to eligible employees for long-term service. In India, it is generally linked to last drawn salary and years of service.
Who is eligible for gratuity?
Employees usually become eligible after completing 5 years of continuous service with the same employer. Some exceptions may apply in case of death or disability.
Which salary components are used for gratuity?
Gratuity is generally calculated using basic salary plus dearness allowance, if applicable. It does not usually include full CTC or allowances like HRA.
How is gratuity calculated?
A common formula is last drawn basic plus DA multiplied by 15/26 and completed years of service. This calculator gives a simplified estimate using that approach.
Are partial years counted for gratuity?
After completing 5 years, service above 6 months is often rounded up to the next year for calculation. Exact treatment can depend on applicable rules.
Is gratuity taxable?
Tax treatment depends on whether you are a government or private employee and the applicable exemption limit. Check current tax rules before relying on the final number.
Can I receive gratuity when switching jobs?
Yes, if you meet eligibility conditions with the employer you are leaving. Gratuity is usually settled during full and final settlement.
Should gratuity be included in retirement planning?
Yes, but treat it as a future lump sum, not monthly income. It can support retirement, debt reduction, or emergency fund goals.