Gratuity Calculator

What is a Gratuity Calculator?

Gratuity is a form of monetary reward that an employer gives to an employee as a gesture of appreciation for their services to the organization. It is a single payment handed out in a lump sum when the employee leaves work, retires, or, in some situations, when the person becomes disabled. To qualify, the employee should have five continuous years of employment under the employment agreement with the company. There are situations where gratuity can be given prior to the five-year mark. For example, when an employee falls ill or is injured in an accident.

The Payment of Gratuity Act of 1972 governs the gratuity calculator India. The sum awarded is based on the previous drawn salary of the employee and their years of service. This advantage is a financial cushion that provides long-term workers with a much-needed reward for their hard work and loyalty.

How Can a Gratuity Calculator Help You?

You are entitled to receive gratuity under the Payment of Gratuity Act, 1972, in the following circumstances:

• You are close to retirement or superannuation.
• You have worked continuously for at least 5 years in the same organization.
• You are not engaged with another full-time employer.

Now, instead of manually struggling with the gratuity formula, you can simply use a gratuity calculator online in India. In such cases, a gratuity calculator for private employees or government workers can be beneficial in several ways:

• Accurate Estimation: Instantly gives you the exact gratuity amount you are eligible for
• Time-Saving: No manual calculating and getting lost, it calculates within a few seconds
• Convenience: Accessible anytime, anywhere, from your phone or computer
• Financial Planning: Knowing your gratuity helps you plan better for retirement and other future expenses

How to Use the Gratuity Calculator?

Gratuity calculator is an easy-to-use tool that helps you estimate your gratuity amount without any assistance. You can use gratuity calculator in India by following these simple steps:

• Input your basic salary and Dearness Allowance (if applicable) using the slider.
• Enter the number of years you have served with the company.
• The calculator will instantly compute the total gratuity amount owed to you.
• You can adjust the input anytime to recalculate the gratuity as needed.
• The tool ensures instant and accurate calculations as you move the sliders.

Benefits of Using the Gratuity Calculator

With advanced techniques, online calculators have become popular. To calculate gratuity online, you can use our gratuity calculator. This calculator offers several benefits for both employers and employees, helping you mitigate financial complexities when calculating gratuity amounts:

What are the Taxation Rules for Gratuity?

The taxation of gratuity in India is governed by theIncome Tax Act of 1961 and varies based on the nature of employment.

• For Government Employees: Workers who are paid their gratuity by the central, state, or local government do not need to pay income tax on their gratuity. This includes employees of Public Sector Undertakings (PSUs) and statutory corporations.


• For Private Sector Employees (Covered Under the Payment of Gratuity Act, 1972): The tax-exempt portion of gratuity is computed according to the provisions of Section 10(10) of the Income Tax Act. The exemption depends on the minimum of the following three values:



₹20 lakh (lifetime exemption limit).

Actual gratuity received.

(Last drawn salary + Dearness Allowance) × 15 × Number of years of service / 26.



• For Private Sector Employees (Not Covered Under the Gratuity Act): The least of the following is exempt from tax:



Last 10 months’ average salary (basic + DA) × number of years of employment × ½.

₹20 lakhs.

Gratuity actually received.



• If Gratuity Exceeds the Exempted Limit: Any excess amount of gratuity received over the exemption limit is taxable at the rate of income tax that applies to the employee in the same financial year.


• Gratuity Received During Employment: When such an employee is given gratuity during service (not because of retirement, resignation, or disability), a full amount is taxable as a portion of salary income.


• Tax Deducted at Source (TDS): If the gratuity exceeds the exempted limit of ₹20 lakh (as per the Union Budget 2025), the employer deducts TDS at the applicable tax rate before making the payment.


• Tax Planning for Gratuity: Employees can strategically plan their gratuity receipts by considering their total taxable income in the relevant financial year to minimize tax liability.

Gratuity Amount Investment Options

Once an employee gets gratuity, they can explore multiple investment options to utilize their funds and meet their financial objectives. A few such investment options to consider are: