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Gratuity Calculator

Simulate your gratuity benefit under the Payment of Gratuity Act and assess the inflation impact on future retirement payouts.

💡 Motto: We don't tell what to pick, we tell how to pick.

Employment Settings

Last Drawn Basic + DA (Monthly)
₹
Completed Years of Service
Yrs
Years until Retirement
Yrs
Expected Yearly Salary Appraisal
%
Expected Inflation Rate
%
Gratuity if you leave today

₹4,61,538

Based on 10 service years
Nominal Gratuity at Retirement

₹27,65,259

Based on 25 service years
Real Value (Today's Power)

₹13,13,152

Purchasing power in 15 years
⚖️ Income Tax Rules on Gratuity:For private sector employees, gratuity is tax-exempt up to a statutory lifetime limit of ₹25,00,000. Any amount received beyond this limit is fully taxable. Government employees enjoy completely tax-free gratuity.
⚠️ The Future Payout Shrinkage:Due to salary growth, your projected nominal gratuity increases to ₹27,65,259 in 15 years. However, due to 5.09% inflation, the real buying power of that payout collapses to ₹13,13,152in today's terms.

Gratuity Accrual Curve (Nominal vs. Real)

Payment of Gratuity Act Regulations

Eligibility & Calculation Formula

Gratuity is a financial benefit paid by employers under the **Payment of Gratuity Act, 1972** as a gesture of appreciation for long-term service.

  • Eligibility: You must complete a minimum of 5 years of continuous service with the same employer (except in cases of death or disablement).
  • Formula: Gratuity is computed as 15 days of salary for every completed year of service, calculated as:
    Gratuity = (15 × Last Drawn Salary × Service Tenure) / 26
    Here, **Last Drawn Salary** is Basic Salary + Dearness Allowance (DA). A month is considered as 26 working days.

Inflation & Tenure Impact

Because gratuity increases with *both* salary growth and tenure, it grows exponentially. However, since the benefit is only paid out when you leave the organization (typically at retirement), it is highly vulnerable to inflation.

If you stay at a company for 25 years, the gratuity you accumulate looks substantial in nominal numbers. Factor in a 5% average yearly inflation, and the real value of the payout is slashed to less than a third of its face value.

Use this calculator to determine if your retirement gratuity is sufficient to meet your long-term goals or if you should build supplementary investments.