Gratuity Calculator

Archived historical, non-current snapshot — dated July 9, 2026 (2026-07-09). The salary-plus-DA basis, 15/26 factor, service rounding, eligibility threshold, and exception described below may not reflect current rules for India. Check authoritative sources for the applicable period before relying on this estimate.

Gratuity in India is a lump-sum employment benefit, not a restaurant tip. This calculator estimates gross gratuity from final monthly salary plus dearness allowance, completed years of service, extra months worked, and a switch for the death or disablement exception. It applies the formula used in the compute function: salary multiplied by rounded years of service multiplied by 15 divided by 26.

The result is useful when you are resigning, retiring, negotiating a settlement, or checking an employer’s full-and-final statement. It shows the estimated gratuity, rounded service years, fifteen days of wages, formula factor, and five-year threshold status. It is still only a calculator. Actual eligibility, ceilings, forfeiture, employer policy, tax withholding, and legal facts can change the amount paid.

How to use this calculator

Enter Final monthly salary + DA using the last month’s basic salary plus dearness allowance. Enter Full years worked and Extra months worked. Leave Death or disablement exception off for ordinary resignation or retirement. Turn it on only when service ended because of death or disablement and the five-year threshold should not be applied.

The calculator is connected to other India-specific planning pages. Use the EPF calculator to estimate retirement savings from provident fund contributions, the lumpsum investment calculator to model investing a final payout, and the salary calculator to convert pay assumptions for broader planning.

How service years are counted

The calculation method uses a simple rounding rule. It floors the years worked, then checks the extra months. If extra months are six or more, it adds one year. If extra months are fewer than six, it adds nothing. A person with 8 years and 4 months is counted as 8 years. A person with 8 years and 6 months is counted as 9 years. The extra-month input is limited by the form to 0 through 11.

Eligibility is then checked. If the death or disablement switch is off, rounded years must be at least five for the calculator to return a gratuity amount. If the switch is on, the calculator bypasses that threshold and calculates the amount from the rounded years. It does not apply any statutory maximum, tax exemption limit, forfeiture rule, or employer-specific enhancement.

Formula used

The rounded service years are:

$\text{rounded years} = \lfloor \text{full years worked} \rfloor + \text{one extra year when extra months are at least six}$

The daily wage basis is:

$\text{daily wage basis} = \frac{\text{final monthly salary plus DA}}{26}$

Fifteen days of wages are:

$\text{fifteen days of wages} = \text{daily wage basis} \times 15$

For eligible cases, gratuity is:

$\text{gratuity} = \text{final monthly salary plus DA} \times \text{rounded years} \times \frac{15}{26}$

The calculator’s logic can be summarized as:

Worked example

Use the default inputs: ₹4,000 final monthly salary plus DA, 12 full years worked, 7 extra months, and the death or disablement exception turned off. Extra months are at least six, so rounded service is 13 years. The five-year threshold is satisfied.

Daily wage basis is:

$\text{daily wage basis} = \frac{4000}{26}$

That is about ₹153.85. Fifteen days of wages are:

$\text{fifteen days of wages} = \frac{4000}{26} \times 15$

That is about ₹2,307.69. The gratuity estimate is:

$\text{gratuity} = 4000 \times 13 \times \frac{15}{26}$

The result is ₹30,000.00. It also shows 13 years as rounded service, ₹2,307.69 as 15 days of wages, 15 / 26 as the formula factor, and a positive five-year threshold status.

Tax treatment, lock-in, and payout planning

Gratuity is paid as a lump sum when employment ends or when the relevant event occurs. It is not locked in after payment, but eligibility before payment is limited by service conditions and exceptions. Tax treatment can vary by government versus non-government employment, exemption limits, amount received, and current law. Because limits and rules can change, do not assume a permanent tax-free amount from any calculator page.

Before spending the payout, reconcile three numbers: the calculator’s gross formula estimate, the employer’s settlement statement, and the net amount after tax withholding or reporting. If the employer uses a higher contractual benefit, the actual gross amount may exceed this statutory-style estimate. If there are eligibility disputes, forfeiture claims, or service-record errors, the employer calculation may be lower until corrected.

Practical gratuity tips

• Keep appointment letters, salary revisions, payslips, and relieving documents.
• Check that basic salary plus DA, not CTC, is used consistently.
• Verify service dates and extra months before accepting the settlement.
• Ask for the employer’s formula breakdown in writing.
• Plan taxes before investing or spending the lump sum.
• Compare the gratuity payout with EPF, leave encashment, bonus, and final salary so your full exit cash flow is clear.

Sources

• India Code, Payment of Gratuity Act, Section 4 — official statutory text for payment of gratuity and the fifteen-days-wages rule.
• Income Tax Department, e-Filing help for individuals — official income-tax filing guidance; exemption rules can change.