Gratuity Calculator

Gratuity Calculator

The FinBrooks Gratuity Calculator helps employees estimate the gratuity benefit based on monthly Basic + DA and completed years of service.

What is gratuity?

Gratuity is a lump-sum employment benefit that may become payable to eligible employees when employment ends under qualifying circumstances. The amount depends on the employee's eligible salary and period of service.

How is gratuity calculated?

For employees covered by the Payment of Gratuity Act, the commonly used formula is last drawn eligible salary multiplied by 15/26 and then multiplied by the number of completed years of service.

What salary is used for gratuity calculation?

The calculation generally considers the eligible last drawn wages, commonly represented by Basic Salary plus applicable Dearness Allowance. Other salary components may not automatically form part of the gratuity calculation.

How many years are required for gratuity?

Eligibility and service requirements depend on the applicable gratuity provisions and the circumstances under which employment ends. The standard calculation for covered employees commonly uses completed years of service, subject to the applicable rules.

Is gratuity taxable?

The tax treatment of gratuity depends on the employee category, applicable exemption limits and the circumstances of payment. The gratuity amount calculated here should therefore not be treated as the final taxable or exempt amount.

What can affect the final gratuity amount?

• Last drawn eligible salary
• Completed years of service
• Whether the employee is covered by the applicable gratuity law
• Reason for cessation of employment
• Applicable statutory limits and rules