Gratuity Calculator: Know Payout For ₹33K To ₹71K Salary In 8.5 Years

Employees nearing the 8-year mark in service often wonder how much they’re eligible to receive as gratuity. Based on your last-drawn basic salary and total service duration, your potential gratuity benefit can vary significantly. The Payment of Gratuity Act , 1972 lays out a clear formula and guidelines for determining this post-employment benefit. If your service crosses five continuous years, and your company employs at least ten people, you are legally entitled to gratuity. Here's a detailed look at what your gratuity amount may look like depending on different salary brackets.

Understanding Gratuity and Who Qualifies

Gratuity is a statutory financial benefit given to employees who have rendered a minimum of five years of continuous service. It is paid either on retirement, resignation, death, disability, or upon reaching the retirement age. The eligibility criteria are straightforward — five years of uninterrupted service in a company that has a minimum of ten employees.

Once eligible, the gratuity benefit is a way to appreciate long-term loyalty and contribution, offering a lump sum calculated through a specific formula defined under the law.

What Is the Formula for Gratuity?

The calculation formula followed under the Payment of Gratuity Act is:

Gratuity = (Last Drawn Basic Salary × Years of Service × 15) ÷ 26

Here, 15 represents the number of days’ wages awarded per year of service, while 26 accounts for the number of working days in a month, excluding weekly offs.

If an employee has completed more than 6 months in the last year of service, the Act allows rounding up to the next full year. Hence, someone with 8 years and 5 months of service will be considered as having served for 8 years, not 9.

Can Employers Opt Out of This Act?

Companies that meet the conditions of the Payment of Gratuity Act cannot opt out. If the organisation employs ten or more people, it becomes legally bound to follow the Act’s provisions. Whether you’re in a public or private enterprise, this obligation applies.

Gratuity Calculation for a ₹33,000 Monthly Basic Salary

Let’s take a scenario where an employee has a last-drawn basic salary of ₹33,000 and a total of 8 years and 5 months of service. As per the rules, the duration is considered 8 years for calculation.

Gratuity = (33,000 × 8 × 15) ÷ 26 = ₹1,52,307

This amount would be payable as a lump sum gratuity at the time of exit or retirement, assuming the employee meets all eligibility conditions.

Gratuity Estimation for ₹56,000 Basic Salary

For someone earning ₹56,000 as the basic salary with the same service length of 8 years and 5 months (rounded to 8 years), the gratuity would be:

Gratuity = (56,000 × 8 × 15) ÷ 26 = ₹2,58,461

The increase in basic pay significantly impacts the final gratuity amount, as expected under the fixed formula.

Gratuity Payout for ₹71,000 Monthly Basic Pay

In this final example, an employee drawing a monthly basic salary of ₹71,000 and working for 8 years and 5 months (considered 8 years) would receive:

Gratuity = (71,000 × 8 × 15) ÷ 26 = ₹3,27,692

This case demonstrates how a higher base salary leads to a more substantial gratuity payout, even when the service duration remains the same.

When Can You Actually Claim Gratuity?

Gratuity becomes payable in a few specific instances:

• On retirement after completing at least 5 years of continuous service

On voluntary resignation after the 5-year threshold

In case of death or permanent disability due to illness or accident

Upon reaching the officially defined age of superannuation

In the unfortunate event of death or disability, the five-year service condition is not mandatory. The nominee or legal heir is entitled to receive the full gratuity amount.

Understanding how gratuity works, and what you’re entitled to, can be a crucial component of your financial planning. Whether you're in the early years of your career or nearing retirement, knowing how the Payment of Gratuity Act impacts you helps you prepare for the future. If you’re changing jobs or resigning voluntarily, ensuring you’ve crossed the 5-year mark can make a meaningful financial difference.

Disclaimer: This article is for informational purposes only. For precise calculations and individual eligibility, it is advisable to consult financial advisors or HR professionals.