Estimate gratuity using last drawn eligible monthly salary, completed service, and whether the employment is covered by the Payment of Gratuity Act. The estimate is not an eligibility or tax determination.
Gratuity formulas used
For an employee covered by the Act, the calculator uses:
Covered employee formula
Gratuity = last drawn eligible salary x 15 / 26 x qualifying years
Service beyond a completed year is rounded up only when the additional period is more than six months. For example, 7 years and 7 months becomes 8 qualifying years, while 7 years and 6 months remains 7.
For employment entered as not covered by the Act, the calculator uses the common half-month formula based on average monthly salary and completed years:
Employee not covered by the Act
Gratuity = eligible monthly salary x 15 / 30 x completed years
Confirm the applicable formula with payroll and the employment contract.
Salary, eligibility, and ceiling
For covered employees, eligible salary generally means last drawn basic pay plus dearness allowance under the statutory definition, not gross salary or take-home pay. Employer policy can provide a more favourable benefit.
Payment eligibility depends on the reason for separation, continuity of service, establishment coverage, and law. The usual five-year condition has exceptions, including death or disablement. This calculator does not decide those facts.
The displayed ceiling is a current reference, not an automatic cap on every employer payment or a final tax-exemption calculation. Government employment and special service rules can differ. Verify the latest notified ceiling and Section 10(10) tax treatment for your category.
Common questions
Does six additional months round up?
For the covered-employment formula used here, only a period exceeding six months rounds up. Exactly six months does not.
Does the calculator use gross salary?
No. Enter the eligible salary base, commonly basic plus qualifying DA for covered employees.
Is every gratuity receipt tax-free?
No. Tax exemption depends on employee category, statutory limits, formula limits, actual gratuity, and prior exemptions. This page estimates the benefit formula only.
More calculators
Use the income tax calculator for an ordinary salary-tax comparison, the EPF maturity calculator for provident-fund accumulation, or the retirement corpus calculator for a broader target.
