Compare gratuity at different service durations:
Gratuity Calculator 2025 – India Gratuity Amount Estimator Updated Feb 2026
Calculate Your Gratuity Entitlement
Estimate your gratuity settlement amount based on salary and years of service under the Payment of Gratuity Act, 1972.
Calculate GratuityKey Takeaways
- 5 year rule: Minimum 5 years of continuous service required
- Formula: (Last Salary × 15 × Years) ÷ 26
- Salary components: Basic + Dearness Allowance only
- Tax free: Up to Rs. 20 Lakhs for private sector
- Rounding: 5 years 7 months = 6 years; 5 years 4 months = 5 years
Gratuity is a lump sum benefit paid by employers to employees as a token of gratitude for long-term service. In India, under the Payment of Gratuity Act, 1972, employees who complete 5 or more years of continuous service are eligible. Our free Gratuity Calculator helps estimate your entitlement upon resignation or retirement.
What Is Gratuity?
Gratuity is a statutory benefit provided to employees as recognition for their service. It is payable on retirement, resignation, death, or disablement after completing qualifying service.
How Gratuity Is Calculated
For employees covered under the Gratuity Act:
- Last Drawn Salary: Basic Salary + Dearness Allowance (DA)
- 15: 15 days wages per year of service
- 26: Number of working days in a month
Example Calculation
Employee details:
- Last Basic + DA: Rs. 50,000
- Years of Service: 10 years
- Gratuity = (50,000 × 15 × 10) ÷ 26 = Rs. 2,88,461
Eligibility Rules
- 5 Year Rule: Must complete 5 continuous years (exception: death/disablement)
- Employment Status: Applies on retirement, resignation, or termination
Tax Exemption (India)
- Government Employees: Fully tax-exempt
- Private Employees: Tax-free up to Rs. 20 Lakhs (increased from Rs. 10 Lakhs in 2018)
- Amount above Rs. 20 Lakhs is taxable as per income tax slab
Employee End-of-Service Benefits Around the World
India's gratuity system under the Payment of Gratuity Act, 1972 is one of several end-of-service benefit schemes globally. Many countries mandate employers to pay a lump sum upon an employee's exit, though the calculation method, eligibility, and tax treatment vary significantly.
| Country | Program Name | Entitlement / Formula | Minimum Service | Key Features |
|---|---|---|---|---|
| India | Gratuity (Payment of Gratuity Act, 1972) | (Last Basic Salary × 15 × Years of Service) ÷ 26; max Rs. 20 Lakhs tax-free | 5 years continuous service; 4 years 240 days counts in some industries | Mandatory for companies with 10+ employees. Covers all employees (permanent, fixed-term). Payable on resignation, retirement, death, or disability. Ceiling Rs. 20 Lakhs. Governed by Payment of Gratuity Act. 7th CPC enhanced government employee benefits further. |
| UAE & Gulf Countries (GCC) | End-of-Service Gratuity (EOSB) | UAE: 21 days/year for years 1–5; 30 days/year beyond 5 years; capped at 2 years’ total wage. Saudi Arabia: Similar formula. Qatar: 3 weeks/year. Bahrain: 15 days/month. | 1 year (UAE); less than 1 year = no gratuity in most GCC states | Tax-free in all GCC states. Self-funded by employer (no contribution fund). UAE transitioning to DIFC Employee Workplace Savings (DEWS) fund-based system for financial free zone employers. Does not cover Emiratisation (Emirati) workers in UAE (they get GPSSA pension instead). Saudi Arabia new labor reforms being phased in. |
| Philippines | 13th Month Pay + Retirement Pay | Retirement pay: minimum 22.5 days’ salary per year of service (RA 7641); 13th month: 1/12 of basic salary per month | 5 years for retirement pay; 13th month pay required from day one, paid before Dec 24 | Philippine law mandates 13th month pay for all rank-and-file employees. Retirement pay at age 60 or upon termination after 5+ years. DOLE (Department of Labor and Employment) oversees compliance. SSS (Social Security System) provides separate pension contributions. |
| Egypt | End-of-Service Indemnity (Labour Law No. 12/2003) | 1 month salary per year for first 10 years + 1.5 months/year thereafter; calculated on last basic salary | 1 year of service for resignation; immediate for employer termination | Egypt's labor law provides strong end-of-service protection. Disputes resolved through Ministry of Manpower. Public sector workers may receive additional pension under Civil Pension Law. Social Insurance (NOSI) provides separate retirement benefits. |
| Brazil | FGTS (Fundo de Garantia do Tempo de Serviço) | Employer deposits 8% of monthly salary into a dedicated FGTS fund account each month; upon termination (without just cause) employee receives balance + 40% penalty paid by employer | Any duration; FGTS account starts on day one; withdrawal allowed on termination, purchase of home, retirement, or severe illness | Brazil’s FGTS is fund-based (unlike India’s book reserve). ~171 million accounts. Compulsory for all CLT-registered workers. Government pays 3% TR interest + inflation on balances. FGTS Digital launched 2023 for real-time deposit verification. The 40% employer penalty for unjust dismissal is financially significant deterrent. |
| UK / Europe | Statutory Redundancy Pay (UK) | UK: 0.5 week pay per year under 22; 1 week under 41; 1.5 weeks per year over 41; max £643/week (2024); EU: varies by country — France 0.25 month/year for first 10 years | UK: 2 years continuous employment | UK statutory redundancy is the floor — many employers offer enhanced schemes. No general end-of-service gratuity in UK/EU (unlike GCC/India). EU member states have widely varying severance regimes. Germany has no statutory general severance right but courts frequently award compensation; works council agreements important. France has generous indemnité de licenciement system. |
Benefit calculations and tax treatment vary significantly by country, employer agreement, and specific employment circumstances. Always verify current statutory rates and consult an employment lawyer or HR professional for your specific situation. This table is for general informational purposes only.
Frequently Asked Questions
About This Calculator
Created by: CalculatorZone Development Team
Content Reviewed: January 2025
Last Updated: February 20, 2026
Methodology: This calculator uses the Payment of Gratuity Act, 1972 formula for covered employees.
This calculator is for educational purposes. Consult a financial advisor for tax planning.
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