Gratuity Calculator

A gratuity calculator is an online tool that helps employees and HR professionals compute the gratuity amount payable to an employee upon resignation, retirement, or termination after completing a minimum of five years of continuous service — under the Payment of Gratuity Act, 1972. The standard gratuity formula is: Gratuity = (Last Drawn Monthly Salary × 15 × Years of Service) ÷ 26, where 15 represents 15 days of salary per year of service, and 26 represents the number of working days in a month. The maximum gratuity payable under the Act is ₹20 lakh (enhanced from ₹10 lakh in 2018). For employees in industries not covered by the Payment of Gratuity Act, a different formula applies: Gratuity = (Last Drawn Salary × Half Month Salary × Tenure), using 30 days as the denominator. Gratuity received at retirement is tax-exempt for government employees and up to ₹20 lakh for private sector employees covered under the Act. For Indian financial planners and investors, the gratuity calculator helps estimate this employer-funded component of retirement income — gratuity, combined with EPF corpus, forms the foundational employer-sponsored retirement benefit for most organised-sector employees in India.