Calculate gratuity amount as per Indian Gratuity Act
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Employees working in private companies that offer EPF benefits become eligible for gratuity after completing five years of continuous service. In certain cases, gratuity may be payable even before five years, such as when an employee suffers permanent disability due to an accident or illness. Gratuity payments are governed by the provisions of the Payment of Gratuity Act, 1972, and the payable amount is calculated based on the employee's last drawn salary and total years of service. WFYI offers a free gratuity calculator that helps you estimate the gratuity amount you may be entitled to receive. If you are eligible for gratuity, checking the estimated amount in advance allows you to understand your benefits clearly and plan your finances with better certainty.
Last Salary = Basic + DA (Dearness Allowance). For organizations not covered under Act, the denominator is 30 instead of 26.
Maximum Gratuity Limit
As per Payment of Gratuity Act, 1972 (amended)
Scenario:
An employee has served an organisation for 5 years and their last drawn basic salary plus DA is ₹40,000
Calculation:
Gratuity = (40,000 × 15 × 5) / 26Result:
₹1,15,384.62
Tax Implications:
Gratuity is a retirement benefit paid to employees under the Payment of Gratuity Act, 1972. It's calculated based on last drawn salary and years of service.
Under the Payment of Gratuity Act, 1972, you may be eligible for gratuity if you are close to superannuation, you have completed 5 continuous years with the same organisation, and you are not employed full-time elsewhere. In such situations, an online gratuity calculator helps because:
It shows the exact gratuity amount you may receive.
It saves time by avoiding manual calculations.
It can be used easily from anywhere.
It supports better long-term financial planning.
Follow these simple steps to calculate your gratuity amount:
Keep all essential details about your employment history handy.
Enter your last drawn basic salary plus dearness allowance, and the gratuity amount will be calculated instantly.
In addition to the numeric result, the calculator displays a visual breakdown that clearly compares your payable gratuity with the maximum gratuity limit.
WFYI provides simple and dependable financial tools to help users make informed decisions. The gratuity calculator is useful because:
Your data is handled securely and is not stored or misused.
The calculator is easy to use and does not require technical expertise.
The calculation follows the standard gratuity formula, ensuring accurate results.
It provides instant results without the need for manual calculations.
It helps you plan long-term finances by giving clarity on your expected gratuity amount.
The tax treatment of gratuity depends on the type of employee and the amount received.
Gratuity received by government employees is fully exempt from income tax.
The least of the following three amounts is exempt from income tax: ₹20,00,000, the actual gratuity amount received, or the gratuity amount calculated as per eligibility under the Act.
The maximum tax-exempt gratuity an employee can claim during their entire professional career is capped at ₹20,00,000.
A: No, gratuity is payable only after completing five years of continuous service. However, this condition is waived in cases of death or permanent disablement due to illness or accident.
A: Yes, the maximum gratuity payable under the Payment of Gratuity Act, 1972 is ₹20 lakh, regardless of the employee's salary or total years of service.
A: After completing five years of continuous service, an employee becomes eligible to receive gratuity. It is payable on superannuation, retirement, resignation, or termination (except in cases of misconduct). In the event of death or permanent disablement, gratuity is payable to the nominee or legal heir even if five years of service are not completed. The maximum gratuity payable is capped at ₹20 lakh under the Payment of Gratuity Act, 1972.
A: There is no limit on usage. You can use the gratuity calculator as many times as needed to estimate your gratuity amount based on different salary or service scenarios.