Welcome to the FineTax Gratuity Calculator! This tool helps you estimate your gratuity amount based on the Payment of Gratuity Act, 1972, applicable in India. Simply enter your monthly salary and the number of years you’ve worked, and click the “Calculate Gratuity” button.
Gratuity Amount:
Gratuity Calculation:
Gratuity is calculated using the following formula under the Payment of Gratuity Act, 1972:
Gratuity = (Last Drawn Monthly Salary * 15 * Number of Completed Years of Service) / 26
Components:
Last Drawn Monthly Salary:
This includes the basic salary and dearness allowance but excludes other allowances or bonuses.
Number of Completed Years of Service:
If an employee has completed more than six months in a year, it is considered as a full year of service.
Example:
Let’s assume the last drawn monthly salary is ₹30,000, and the employee has completed 8 years and 7 months of service.
Gratuity = (30,000 * 15 * 8) / 26
Important Points:
The maximum gratuity amount as per the act is ₹20 lakhs.
The 15 in the formula represents 15 days of wages for every completed year of service.
The denominator 26 is used to account for 15 days of wages in a month.
