Gratuity Calculator

A Gratuity Calculator helps you know how much amount you will receive after completing five years in your company.

Gratuity Calculator

The Gratuity Calculator utilises a formula to estimate the gratuity amount you can receive, typically after completing five years of service in your current company. Private company employees eligible for Employee Provident Fund (EPF) benefits become eligible for gratuity after this period. In certain cases, such as incapacitation due to illness or accidents, employees may qualify for gratuity before five years. Our online gratuity calculator can help determine the gratuity amount you're entitled to. These calculations adhere to the regulations outlined in the Payment of Gratuity Act of 1972, factoring in your last drawn salary and the duration of your corporate service.

What is gratuity?

Gratuity is the sum an employer pays to an employee in acknowledgment of their services to the company. This benefit is granted to employees with 5 years or more of continuous service and is regulated by the Payment of Gratuity Act, 1972.

In cases of disability caused by an accident or illness, employees may receive gratuity before completing five years. The gratuity amount is primarily determined by the employee's last drawn salary and the duration of their service to the company.

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What is a gratuity calculator?

A gratuity calculator is an helpful tool for estimating the amount you would receive upon leaving a job

Gratuity formula:

G = n * b * 15 / 26


  • G: Your estimated gratuity amount
  • n: Number of years you've worked for the organization
  • b: Your last drawn basic salary plus Dearness Allowance (DA)

By inputting your specific information into this formula, you can get a clear picture of your potential gratuity benefits.

What are the eligibility criteria for payment of gratuity?

The Payment of Gratuity Act of 1972 is applicable to all establishments or organisations employing 10 or more employees. Employers who wish to provide gratuity benefits to their employees can choose to adopt the provisions of the Payment of Gratuity Act of 1972, and therefore, become liable to pay gratuity to eligible employees.

The following conditions must be met for the employee to earn a gratuity:

  • The employee must be qualified for retirement benefits.
  • The worker ought to have retired.
  • The employee must have left their position after five years with the same company.
  • The employee must have passed away or become disabled as a result of an illness or accident.

Gratuity Calculation – What is the formula for calculating the Gratuity?

The gratuity rules and calculations are prescribed by the Payment of Gratuity Act of 1972.

There are mainly two categories, as given below.

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

Category 1: Employees covered under the Act

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

The Gratuity calculation formula that you can use to calculate the Gratuity amount is:

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.
  • The gratuity calculation is accounted at the rate of 15 days wages.

The last drawn salary should be calculated to account for the following components:

  • Basic
  • Dearness Allowance – for government employees
  • The commission received on sales

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

Gratuity = Rs. 80,000 x (15/26) x 10 = Rs. 4,62,000

The four months are below 5, so it is rounded off to 10. Months more than five are rounded off to the following year.

Category 2: Employees not covered under the Act

You can be paid a gratuity even if the organisation 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 organisation is not covered under the Act, then the calculation will be as follows:

Gratuity = Rs. 80,000 x (15/30) x 10 = Rs. 4,00,000

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.

How can a gratuity calculator help you?

The gratuity calculator is useful in a number of situations, some of which are listed below:

  1. Decide how much you will get
    The calculator provides you a rough indication of the gratuity you will get when you retire. It aids in calculating the pay you receive from the employer in exchange for your years of service.
  2. Facilitates improved financial planning
    By knowing the gratuity funds, you can build a strategy. With the appropriate investments, you can enjoy your retirement without worrying about money. You can carefully arrange your funds and make other investments once you are informed of the gratuity you will receive.
  3. Saves time
    You do not need to spend many hours determining the gratuity you will receive; you can get precise findings quickly. Enter the necessary information into the calculator to get precise results quickly.

How to use Bajaj Finance gratuity calculator?

It is easy to use the Bajaj Finance gratuity calculator. You only need to enter the correct data for the calculator to do most of the work for you. To calculate your gratuity value, provide the pertinent information below.

a. Monthly income: Using the slider, you must input the base pay and, if necessary, the dearness allowance. You can also input the value directly.
b. Tenure: The number of years spent working for the company is then entered.

Based on the above data, the gratuity calculator determines the total amount of gratuity due to you. By adjusting the input sliders, you can recalculate the gratuity whenever you like. Moving the sliders will immediately calculate the gratuity.

Benefits of Using the Bajaj Finance Gratuity Calculator

The Gratuity Calculator is a helpful tool because it makes figuring out your gratuity amount easy and quick. It takes the guesswork out of calculating and ensures you know how much money you can expect after completing a certain number of years in your job by inputting your Monthly Income (basic+DA) and tenure. This calculator is especially handy for employees to understand their entitlement and make informed financial plans.

What are the Taxation Rules for Gratuity?

Gratuity received by government employees is fully exempt from income tax.

For private employees, it hinges on whether these employees meet the eligibility criteria outlined in the Payment of Gratuity Act. Tax exemptions are determined based on this criterion.

Employees covered under the Payment of Gratuity Act enjoy tax exemption under specific circumstances. Among the following options, the one that is the least qualifies for tax exemption:

  • Gratuity of Rs. 20 lakh
  • The final salary amount is calculated by adding together the basic salary and dearness allowance (DA), then multiplying the result by the length of employment, and finally multiplying that by the total number of working days in a month.
  • The actual gratuity amount received

Gratuity amount investment options

  1. Fixed Deposits (FD): A secure option with guaranteed returns and minimal risk. Ideal for risk-averse individuals looking to preserve their gratuity amount.
  2. Public Provident Fund (PPF): A government-backed long-term savings scheme offering tax benefits under Section 80C of the Income Tax Act. Suitable for building a retirement corpus.
  3. Mutual Funds: A diversified investment option with potential for higher returns than FDs and PPF. However, carries market risks and requires careful selection of funds.
  4. National Pension Scheme (NPS): A retirement-focused investment with tax benefits and exposure to various asset classes like equity, corporate bonds, and government securities.
  5. Gold: A traditional investment option considered a haven during economic uncertainty. Can be bought in physical form or through gold ETFs and Sovereign Gold Bonds.

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 deposits, a lucrative, safe, and highly stable investment option.

Frequently asked questions

How to calculate gratuity?

The gratuity for an employee is calculated using the following formula: Gratuity = (Last drawn salary) x (15/26) x (Number of years of service). The 15/26 factor in this formula accounts for the estimated 15 working days in a month out of a total of 26, effectively calculating the gratuity based on 15 days' worth of wages for each completed year of service.

What is the rule of gratuity calculation?

As per the new rule of gratuity, every year of service, an employee is entitled to 15 days of pay as gratuity. The company is required to pay an amount equal to 15 days of the employee's most recent wage as part of the gratuity for each year of service.

Are 4.8 years eligible for gratuity?

For gratuities, employees must have at least five years of service: Those who have worked for the company for five years are entitled for gratuities. The requirement does not, however, apply when an employee passes away or becomes disabled.

Is there any upper limit on the amount of gratuity that you will receive?

Yes, there is an upper limit set at Rs. 20 lakh as per the Payment of Gratuity Act, 1972

How much time does the employer take to release the gratuity amount?

Within 30 days of the employer receiving the application form, the gratuity sum must be paid. If the employer misses the deadline, he is responsible for paying the gratuity amount plus simple interest.

Will I lose the gratuity amount if my employer goes bankrupt?

The gratuity sum remains payable even in the event of your employer facing bankruptcy. No court order can impose a stay on the disbursement of the gratuity amount.

Where should I Invest my gratuity amount?

Gratuity funds, often life savings, can grow with safer, high-return investments like Bajaj Finance Fixed Deposits, offering rates up to 8.65% p.a. Bajaj Finance FD have top safety ratings of [ICRA]AAA(Stable) and CRISIL AAA/STABLE.

You can use the FD calculator to determine how much interest you can earn by investing your gratuity amount in fixed deposit.

I resigned from my job after working for 4.5 years. Would I be eligible to receive gratuity?

If you've worked for 4.5 years, you may not be eligible for gratuity, as typically, a minimum of 5 years of continuous service is required.

If an individual is a contract employee, will he receive gratuity on completing 5 years in service?

Contract employees are eligible for gratuity if they complete 5 years of continuous service with the same contractor, as per the Payment of Gratuity Act.

How do I nominate someone to receive my Gratuity in case of my death?

It is mandatory to make a Gratuity nomination within 30 days of completing one year of employment as per the Payment of Gratuity Act, 1972,. Only 'family members' are eligible for nomination, and in the absence of 'family' members, you have the option to nominate anyone to receive the Gratuity. To fulfill this requirement, you need to complete and submit Form 'F'.

Is the formula for gratuity 30 or 26?

The formula for gratuity uses 26, representing the number of working days in a month, as it excludes weekends. The calculation typically follows the formula: (15 * last drawn salary * years of service) / 26.

Why is gratuity multiplied by 15?

Gratuity is multiplied by 15 to represent 15 days of salary for each year of service. This is part of the standard calculation method to determine the amount an employee is entitled to receive.

Is gratuity calculated on full salary?

Gratuity is not calculated on the full salary, but on the last drawn basic salary plus dearness allowance (DA).

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

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.