Gratuity Calculator
Work out gratuity for a leaving employee from last drawn basic + DA and service, with eligibility and the tax-exempt cap.
How to use the free Gratuity Calculator
- Enter your figures in the fields above – use real numbers from your PMS, channel manager or accounts.
- Tap the button to see the result instantly. Change any value to compare scenarios.
- Copy, print or save the result and use it in your daily or monthly review.
This Gratuity Calculator runs fully in your browser on mobile or desktop – no sign-up and nothing is uploaded. Free gratuity calculator for Indian hotels. Use the 15/26 formula on last drawn basic + DA, check 5-year eligibility and the ₹20 lakh tax-exempt cap.
How gratuity is calculated in India
Gratuity is a lump sum an employer pays when an employee leaves after long service. Hotels, restaurants and resorts with 10 or more employees are covered by the Payment of Gratuity Act, 1972. For a monthly-paid employee the formula treats a month as 26 working days and pays 15 days of wages for every year counted.
Example: a front office supervisor leaves after 7 years and 8 months with basic + DA of ₹32,000. The extra 8 months is more than six, so 8 years are counted. Gratuity = ₹32,000 × 15 ÷ 26 × 8 = ₹1,47,692.
Rules worth knowing
- Eligibility: normally 5 years of continuous service. The 5-year rule does not apply on death or disablement, and fixed-term employees qualify after 1 year under the Code on Social Security, 2020.
- Part years: a part year of more than six months counts as a full year. You can switch the rounding rule above if your advisor reads it differently.
- Wages: only basic pay and dearness allowance, not HRA, bonus, overtime or allowances. Under the labour codes, if allowances exceed half of total pay, the excess may be added back to wages, so check your salary structure.
- Ceiling: ₹20 lakh is both the maximum payable under the Act and the income-tax exemption limit for non-government employees. The cap is editable here.
Plan for gratuity in your budget
Gratuity is a real liability that grows every year your team stays. Many hotels provide about 4.81% of basic pay (15 ÷ 26 ÷ 12) each month in their payroll cost, or buy a group gratuity policy from an insurer. Include it when you build your annual hotel budget so a senior chef or housekeeper leaving does not hit one month's cash flow.
Pay gratuity within 30 days of it becoming payable; delays attract interest. Rules change — verify with your CA/HR advisor. This calculator gives an estimate, not legal or tax advice.
Frequently asked questions
How is gratuity calculated for hotel staff?
Multiply the last drawn monthly basic plus DA by 15, divide by 26, and multiply by the number of years counted. A part year of more than six months counts as a full year.
Is gratuity payable before 5 years of service?
Usually not, but the 5-year rule does not apply on death or disablement, and fixed-term employees qualify after 1 year under the Code on Social Security. Check the current rules with your HR advisor.
How much gratuity is tax-free?
For non-government employees the exemption is capped at 20 lakh rupees over the whole career. The amount above the cap is taxable. Confirm the latest limit with your CA.
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