Gratuity Calculator

Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered. It is payable on retirement, resignation (after 5 years), death, or disablement.

For employees covered under the Payment of Gratuity Act: Gratuity = (Last drawn salary × 15 × Years of service) / 26. Last drawn salary = Basic + DA.

For government employees, gratuity is fully exempt. For private sector employees covered under the Act, exemption is the minimum of: actual gratuity received, ₹20 lakhs, or (15/26 × last salary × years of service).

There is a Supreme Court judgment stating that an employee who has completed 4 years and 240 days (i.e., 4 years 8 months) is eligible for gratuity. However, most companies still require 5 complete years.