💰 Employee Gratuity Calculator
Estimate your retirement gratuity amount
Gratuity is paid if you have worked for more than 5 years
📊 Gratuity Calculation Results
ℹ️ About Gratuity
- • Gratuity is payable if you have completed 5 or more years of continuous service
- • Exception: Gratuity is still payable upon death or disablement before 5 years as per the Act
- • Formula: (Basic + DA) × 15 × Credited Years ÷ 26
- • Credited years: Add 1 year only when months > 6, otherwise ignore months
- • Maximum gratuity amount is capped at ₹20,00,000 as per current rules
- • This is an estimate – actual amount may vary based on company policy
Understanding Employee Gratuity Calculator
An Employee Gratuity Calculator is an essential financial tool that helps employees estimate their gratuity amount upon retirement or resignation. Gratuity is a statutory benefit provided to employees under the Payment of Gratuity Act, 1972, serving as a token of appreciation for their dedicated service to an organization.
What is Employee Gratuity?
Employee gratuity is a lump sum payment made by employers to employees who have completed a minimum of 5 years of continuous service. This benefit is applicable to organizations with 10 or more employees and is governed by the Payment of Gratuity Act, 1972. The gratuity amount serves as financial security for employees during their retirement or career transitions.
Gratuity Calculation Formula
The standard formula is: (Basic + DA) × 15/26 × credited years, where credited years add 1 only if months > 6. This formula considers the employee’s basic salary plus dearness allowance, and applies the statutory multiplier of 15 days for each completed year of service.
Key Components of Gratuity Calculation:
- Basic + DA: Basic salary plus Dearness Allowance if it forms part of retirement benefits
- Credited Years: Years + 1 only when months > 6, otherwise ignore months
- Statutory Factor: 15 days salary for each completed year
- Working Days: 26 working days per month (as per the Act)
Eligibility Criteria for Gratuity
To be eligible for gratuity payment, employees must meet specific criteria as outlined in the Payment of Gratuity Act:
- Minimum 5 years of continuous service with the same employer
- Employment in an organization covered under the Gratuity Act
- Resignation, retirement, death, or disablement during service
- The organization must have 10 or more employees
Maximum Gratuity Limit
As per the current regulations, the maximum gratuity amount is capped at ₹20,00,000 (Twenty Lakhs). This limit was revised from the previous cap of ₹10,00,000 to provide better financial security to employees. Even if the calculated gratuity exceeds this amount, the payment will be limited to the statutory maximum.
Benefits of Using Our Gratuity Calculator
Accurate Calculations
Uses the official gratuity formula as per Indian labor laws
Instant Results
Get immediate gratuity estimates with detailed breakdown
Eligibility Check
Automatically verifies if you meet the 5-year service requirement
Mobile Friendly
Calculate gratuity on any device, anywhere, anytime
Frequently Asked Questions (FAQ)
What is gratuity and who is eligible?
Gratuity is a lump sum payment made by employers to employees as a token of appreciation for their services. Employees who have completed 5 or more years of continuous service are eligible for gratuity under the Payment of Gratuity Act, 1972.
How is gratuity calculated?
Gratuity is calculated using the formula: gratuity = (Basic + DA) × 15/26 × credited years, where credited years apply the six-month rounding rule as per the Payment of Gratuity Act. The basic salary includes dearness allowance (DA) if it forms part of retirement benefits.
Is there a maximum limit on gratuity amount?
Yes, the maximum gratuity amount is capped at ₹20,00,000 (20 lakhs) as per the Payment of Gratuity Act, 1972. This limit was increased from the previous cap of ₹10,00,000.
When is gratuity paid?
Gratuity is paid when an employee resigns, retires, or in case of death or disablement during service. Employers must pay within 30 days of it becoming due; thereafter simple interest is payable unless the delay is due to the employee and permitted by the authority, as per Sections 7(3) and 7(3A) of the Payment of Gratuity Act.
Is gratuity taxable?
For non-government employees, gratuity is exempt up to ₹20 lakh under Section 10(10) of the Income Tax Act. Any amount exceeding ₹20 lakh is taxable as per applicable income tax slabs. Government employees enjoy full exemption on gratuity payments, though specific service rules may apply.
Can gratuity be forfeited?
Yes, gratuity can be forfeited in cases of misconduct, termination for cause, or if the employee’s conduct has been detrimental to the organization. However, such forfeiture must be justified and follow due process.