What is a Gratuity Calculator?
The Gratuity Calculator computes the gratuity amount payable to an employee on retirement, resignation, or death as per the Payment of Gratuity Act, 1972. Gratuity is a statutory benefit in India paid by employers to employees completing a minimum of 5 years of continuous service.
Benefits of Using Rupee Logic Gratuity Calculator
Accurate Formula
Uses the exact statutory formula as per the Payment of Gratuity Act, 1972 for precise calculation.
Act vs Non-Act
Handles organisations covered under the Gratuity Act (26-day formula) and those not covered (30-day).
Tax Exemption
Shows the tax-free limit of ₹20 lakh and any taxable gratuity amount above the exemption ceiling.
Retirement Planning
Factor gratuity into your overall retirement corpus for complete and accurate financial planning.
Frequently Asked Questions — Gratuity Calculator
For organisations covered under the Gratuity Act (10+ employees): Gratuity = (Last Basic Salary + DA) × 15 × Years of Service / 26. For organisations not covered: Gratuity = (Last Basic Salary + DA) × 15 × Years of Service / 30. The 26 represents working days in a month per the act, and 15 represents half a month salary per completed year of service.
Minimum 5 years of continuous service is required for gratuity eligibility on voluntary resignation or retirement. Exceptions: on death or permanent disablement, gratuity is paid regardless of tenure (even below 5 years). The Supreme Court has held that 4 years and 240 days qualifies as 5 years in industries with seasonal work patterns.
The maximum tax-exempt gratuity for non-government employees is ₹20,00,000 (₹20 lakh) as revised in 2018. Any gratuity above ₹20 lakh is taxable as salary income. Government employees gratuity is fully exempt with no upper limit. The ₹20 lakh limit applies to the total of all gratuities received from all employers during a lifetime.
Gratuity must be paid within 30 days from the date it becomes payable. If the employer delays, they must pay simple interest from the due date to actual payment date. The employee must apply in Form I to the employer within 30 days of becoming eligible. Non-payment can be reported to the Controlling Authority (typically the Labour Commissioner) for enforcement.
Contract employees are also entitled to gratuity if they have completed 5 years of continuous service, provided the employing organisation has 10 or more employees. The Supreme Court has clarified that terms like contract or temporary do not exempt employers from gratuity liability if work is continuous. Fixed-term employees are entitled to proportionate gratuity from the first year itself.