Gratuity Calculator
Calculate your gratuity amount based on salary and years of service.
Employee type
Covered under Payment of Gratuity Act (÷26 formula)
Results
Gratuity amount
₹86,538
Monthly basic
₹30,000
Years of service
5 years
Tax-free amount
₹86,538
Taxable gratuity
₹0
Track your gratuity as part of your net worth
Your gratuity is a meaningful asset — add it in FlowTrack as part of your overall financial picture. Many people forget it when calculating net worth.
Try FlowTrack free →This is an estimate for planning purposes only and does not constitute financial advice.
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for their long service. Under the Payment of Gratuity Act, 1972, employees who have completed at least 5 continuous years of service are entitled to gratuity at the time of resignation, retirement, death, or disablement. The formula for covered employees is: (Basic + DA) × Years of Service × 15 ÷ 26, where 26 represents the number of working days in a month.
The tax-free gratuity limit was raised to ₹20 lakhs in 2019, making gratuity one of the most tax-efficient components of your compensation. For government employees and those covered under the Payment of Gratuity Act, the ÷26 formula applies. Private sector employees not covered under the Act use the ÷30 formula, which generally yields a smaller amount. When changing jobs, it is important to check whether your tenure qualifies — most companies require minimum 5 years (4 years 240 days is usually accepted as qualifying for the 5th year).
Gratuity is an often-overlooked component of total compensation. If you have been with your employer for several years, the accumulated gratuity can be a significant asset — sometimes running into several lakhs or even crores for long-tenured employees. Include it when calculating your total net worth and financial plan, especially if you are approaching retirement.