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Gratuity Calculator

Gratuity is a cash benefit provided by an employer to an employee for the services rendered to the organization. It is paid at the time of retirement, resignation, layoff or termination, provided the employee has completed five years of continuous services before leaving the organization. In certain cases, such as death or disablement, the rule of continuous 5-year service is relaxed.



Gratuity Maturity

(For employees covered under Gratuity Act)

Please read below to know more about the Gratuity Act.


Gratuity Maturity

(For employees not covered under Gratuity Act)

Please read below to know more about the Gratuity Act.


Disclaimer :

The gratuity amount calculated is an estimate only, and is computed based on the information provided by you. The actual amount may be slightly different.

What is a Gratuity Calculator?

You can use the gratuity calculator to estimate the amount of money you will receive if you are planning to leave a job after a minimum of five years of services or looking forward to your retirement. There are various rules for gratuity calculation that you should keep in mind beforehand. We will look at various rules that will help you estimate your gratuity amount so that you can plan your investments better upon receiving the money.

Gratuity Calculation Formula

The gratuity rules and calculation are prescribed by the Payment of Gratuity Act, 1972. There are mainly two categories of calculations determined, as detailed below:

Category 1: Employees covered under the Act
Category 2: Employees not covered under the Act

These two categories cover both private as well as government employees. For government employees, there are more heads to be accounted for which are specific to their pay structure, such as, Dearness Allowance. All organizations with at least ten employees working on a single day for the preceding 12 months are required to pay gratuity.

  • Category 1: Employees covered under the Act

Using the two important parameters – number of years of service and last salary drawn, you can calculate the gratuity as follows –

Gratuity = Last drawn salary x (15/26*) x Number of years of service

*the number of working days per month is taken as 26 days.

** gratuity calculation is done at the rate of 15 days wages

Last drawn salary should be carefully calculated to account for the following components –


Dearness Allowance – for government employees

Commission received on sales

Example: If you had been drawing Rs 80,000 as your last basic salary with 10 years 4 months of employment tenor, then the gratuity amount you will receive as per the formula is:

Gratuity = Rs 80,000 x (15/26) x 10 = Rs 4.62 lakhs

The 4 months is below 5, so is rounded off to 10. Months more than 5 are rounded off to the next year.

  • Category 2: Employees not covered under the Act

You can be paid a gratuity even if the organization is not covered under the Act. If that is the case, the number of working days in a month changes to 30 days instead of 26 days.

Gratuity = Last drawn salary x (15/30) x Number of years of service

In the above example, if your organization is not covered under the Act, then the calculation will be as follows –

Gratuity = Rs 80,000 x (15/30) x 10 = Rs 4.00 lakhs

For employees covered under the Act, the benefit of a lower denomination is given. Hence, working days in a month are taken as 26 days instead of 30 days.

Where Should You Invest Your Gratuity Funds?

Gratuity funds can fetch you higher returns if invested wisely. Do not let the gratuity money stay idle in your savings account where it will only give negative returns, accounting for inflation. You can easily earn good returns by investing such lumpsum into fixed deposit which is a lucrative, safe, and a highly stable investment option.

Company FDs like Bajaj Finance Fixed Deposit provide various benefits, such as -

  • Flexibility of tenor - You can look at tenors ranging from 12 to 60 months as per your requirement. The flexibility of tenor helps you ladder your fixed deposits across various interest rate buckets.
  • High interest - You can be assured of 6.50% interest rate for 3-5 years, with an additional 0.25% for senior citizens and 0.10% on online deposits (not applicable for senior citizens)
  • Stability - With credibility assured by CRISIL and ICRA ratings, Bajaj Finance FD can help you create a portfolio suited for meeting financial goals in any age group.
  • Interest payouts - You can avail interest payouts as per your choice of fixed intervals – monthly, quarterly or annually. You can use FD Calculator to calculate returns
  • Cumulative and non-cumulative options - Cumulative FD helps you to build a corpus if you have a longer working life left where you do not require the money at regular intervals. You can ensure regular monthly income post-retirement with the non-cumulative FD option.

Bajaj Finance Fixed Deposit assures you the guarantee of returns, while being a flexible and high yielding investment option for your gratuity amount.

Are you interested in investing your gratuity funds in a fixed deposit? Find out how to open an FD account.

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