Gratuity Calculation: How Much Gratuity Will You Get on Resignation?

What Is Gratuity?

Gratuity is a lump-sum payment your employer gives you for long service, paid on leaving the job. It is governed by the Payment of Gratuity Act, 1972 and applies to employees who complete at least 5 continuous years with an organisation.

The gratuity calculator on ToolPilot works out your exact entitlement in seconds.

The Gratuity Formula

Gratuity = (Last drawn basic + DA) × 15 × Years of service ÷ 26

The 15 represents 15 days of salary per completed year, and 26 is the number of working days used in the calculation (not 30).

Gratuity Calculation Example

Suppose your last drawn basic + DA is ₹30,000 and you served 12 years:

30,000 × 15 × 12 ÷ 26 = ₹2,07,692

When Is Gratuity Paid?

• Retirement — on completing your service with the employer.
• Resignation — after 5+ continuous years.
• Termination — payable for the years served, subject to the 5-year rule exceptions.
• Death or disability — payable immediately, even before 5 years.

The 5-year rule is waived for death or disability, so families receive the amount without completing five years of service.

Exceptions to the 5-Year Rule

The 5-year condition applies to normal leaving. For death or disability, gratuity is payable regardless of service length. Some organisations also pay gratuity before 5 years as a policy benefit — check your appointment letter and company handbook.

Use the Calculator, Don't Guess

Enter your last basic + DA and your completed years of service in the gratuity calculator. It returns the exact gratuity amount that should appear in your full and final settlement.

Also verify whether gratuity shows up in your salary breakup — if your CTC includes gratuity, it is usually 4.81% of basic per year.

Frequently Asked Questions

• Is gratuity taxable? Up to ₹20 lakh is tax-exempt under Section 10(10) — the calculator shows the gross amount.
• Does part-time work count? Only continuous service with the same employer counts.
• Is it free? Yes, the gratuity calculator is free.

Know exactly what you are owed — calculate gratuity with the free tool.