Gratuity Calculator – India & Pakistan End-of-Service Benefit in 3 Easy Steps
Gratuity Estimator
Use this gratuity calculator to estimate your end-of-service gratuity based on standard regional laws or custom company policies.
Use this free gratuity calculator to estimate the lump sum you are owed when you leave a job, retire or complete your service. It follows the standard formula used in India and Pakistan and also has a custom mode for company policies with different rules.
Quick answer
In India, gratuity = last drawn salary (basic + DA) × 15 × years of service ÷ 26. A salary of ₹60,000 with 7 years 8 months of service (rounded to 8 years) gives ₹2,76,923. In Pakistan, the usual rule is 30 days’ wages for each completed year, which works out to one month’s last salary per year: Rs 1,20,000 for 6 years gives Rs 7,20,000.
Table of Contents
Gratuity is often the biggest single payment an employee receives when leaving a company, yet few people know how it is worked out. Payroll teams also need a quick check before releasing a full and final settlement.
This gratuity calculator handles the service rounding and the formula for you. It runs in your browser, and nothing you enter is saved.
What Is Gratuity?
Gratuity is a lump-sum benefit an employer pays to an employee as a thank-you for long service. It is usually paid on resignation, retirement, termination, or to the nominee if the employee dies. The amount depends on the last salary drawn and the number of years worked.
Gratuity Formula in India
For employers covered by gratuity law in India, the formula is:
- Gratuity = last drawn salary × 15 × years of service ÷ 26
- Last drawn salary = basic pay + dearness allowance (DA)
- 15 = days of wages paid for each year of service
- 26 = working days in a month (Sundays excluded)
Service of more than six months in the final year is rounded up to a full year, so 7 years 8 months counts as 8 years, while 7 years 5 months counts as 7.
Eligibility and Limits in India
- Permanent employees normally need at least five years of continuous service. The five-year rule does not apply on death or disablement.
- Under the new labour codes, fixed-term employees can qualify after one year of service.
- The statutory maximum is ₹20 lakh. Employers may pay more under their own policy, but tax rules treat the excess differently.
- Employers not covered by the law may use their own formula, often based on 30 days instead of 26.
Gratuity Formula in Pakistan
In Pakistan, permanent workers in many industrial and commercial establishments are entitled to 30 days’ wages for every completed year of service, with a period over six months counted as a full year. This applies under the standing orders where the employer does not run a contributory provident fund instead.
Since 30 days’ wages equal one month’s pay, the simple version is: gratuity = last monthly salary × years of service. Many companies use basic salary only, so check your appointment letter and company policy.
How to Use the Gratuity Calculator
Step 1: Choose the Law and Enter Your Details
Pick India, Pakistan or Custom Policy from the calculation mode menu. Enter your last drawn salary (basic + DA) and your total service in years and months. In the example, the salary is ₹60,000 and service is 7 years 8 months.
Step 2: Calculate Your India Gratuity
Press Calculate Gratuity. The tool rounds 7 years 8 months up to 8 years and applies the 15/26 formula: 60,000 × 15 × 8 ÷ 26 = ₹2,76,923.08. It also shows the service period it used and the multiplier applied.
Step 3: Check a Pakistan or Custom Policy Result
Switch to Pakistan to apply 30 days’ wages per year. With a last salary of Rs 1,20,000 and 6 years 3 months of service, the extra 3 months are not rounded up, so the gratuity is 1,20,000 × 6 = Rs 7,20,000. Use Custom Policy if your employer uses a different number of days.
Gratuity Calculation Examples
| Country | Last salary | Service | Counted years | Gratuity |
|---|---|---|---|---|
| India | ₹40,000 | 5 yrs 2 mo | 5 | ₹1,15,385 |
| India | ₹60,000 | 7 yrs 8 mo | 8 | ₹2,76,923 |
| India | ₹1,00,000 | 20 yrs 7 mo | 21 | ₹12,11,538 |
| Pakistan | Rs 80,000 | 4 yrs 7 mo | 5 | Rs 4,00,000 |
| Pakistan | Rs 1,20,000 | 6 yrs 3 mo | 6 | Rs 7,20,000 |
Is Gratuity Taxable?
In India, gratuity received by government employees is fully exempt. For private-sector employees, the exemption is the lowest of the actual gratuity, the statutory formula amount and ₹20 lakh; anything above that is taxed as salary. In Pakistan, tax treatment depends on whether the gratuity fund is approved by the tax authority. Ask your employer’s payroll team or a tax adviser for your exact case.
To plan what to do with a gratuity payout, try the PPF Maturity Calculator or the NPS Calculator.
Frequently Asked Questions
How is gratuity calculated in India?
Multiply the last drawn basic salary plus DA by 15 and by the years of service, then divide by 26. Service over six months in the final year counts as a full year.
How is gratuity calculated in Pakistan?
Gratuity is usually 30 days’ wages for every completed year of service, which equals one month’s last salary per year. A period of more than six months counts as a full year.
Can I get gratuity before 5 years in India?
Permanent employees normally need five years of continuous service, except on death or disablement. Fixed-term employees can qualify after one year under the new labour codes.
Which salary is used for gratuity?
In India it is basic pay plus dearness allowance. Allowances like HRA, bonus and overtime are not included. In Pakistan, many employers use basic salary, so check your policy.
What is the maximum gratuity in India?
The statutory ceiling is ₹20 lakh. An employer can pay more by policy, but the extra amount is not covered by the tax exemption for private-sector employees.
Is this gratuity calculator accurate for my company?
It uses the standard legal formulas. Your employer’s policy, contract or provincial law may differ, so treat the result as an estimate and confirm with HR.