Gratuity Calculator
Gratuity is the lump sum your employer owes you after long service. Enter your last drawn monthly salary (basic + DA) and your years of service to get an instant estimate.
Gratuity amount
₹0
(salary × 15 ÷ 26) × years of service
Tax-free portion
₹0
Exempt up to ₹20 lakh (lifetime limit)
Taxable portion
₹0
Amount above ₹20 lakh is taxable
How the gratuity formula works
Gratuity is governed by the Payment of Gratuity Act, 1972, which covers establishments with 10 or more employees. For every completed year of service you earn 15 days' wages. A month is taken to have 26 working days, so the statutory formula is:
Gratuity = (last drawn monthly salary × 15 ÷ 26) × years of service
"Last drawn salary" means your basic salary plus dearness allowance when you leave — HRA and conveyance don't count. Service can include fractions, and a fraction above six months rounds up to a full year. So 6 years 8 months counts as 7 years; 6 years 4 months counts as 6.
Worked example
Take a last drawn basic + DA of ₹50,000 a month with 6 years of service:
- 15 days' wages = ₹50,000 × 15 ÷ 26 = ₹28,846.15
- Gratuity = ₹28,846.15 × 6 = ₹1,73,077
- Below ₹20 lakh, so the whole amount is tax-free for a private-sector employee.
Eligibility and tax rules in India
- 5-year rule: you need 5 years of continuous service with the same employer. Courts have treated 4 years and 10 months as 5 years. The rule doesn't apply on death or disablement — then gratuity is paid whatever the tenure.
- Tax: private-sector employees get exemption up to ₹20 lakh — a lifetime cap across all employers. Anything above is taxable as salary. Government employees get full exemption on the entire amount.
- Payment timeline: the employer must work out the amount and pay within 30 days of it becoming due (your last working day). Late payment can attract simple interest.
- Nomination: you can nominate a family member to receive your gratuity. If you haven't, it's worth doing — the paperwork is far simpler for a nominee.
How to use this gratuity calculator
- Enter your last drawn monthly salary — basic plus dearness allowance only.
- Enter your years of service with the same employer. Decimals are allowed, so 6.5 means six and a half years.
- Press Calculate to see the gratuity amount and how much of it is tax-free.
Gratuity at a ₹50,000 salary, by years of service
| Years of service | Gratuity amount |
|---|---|
| 5 years | ₹1,44,231 |
| 10 years | ₹2,88,462 |
| 15 years | ₹4,32,692 |
| 20 years | ₹5,76,923 |
| 25 years | ₹7,21,154 |
| 30 years | ₹8,65,385 |
Each extra year of service at this salary adds ₹28,846 — exactly 15 days of wages. Salary growth matters even more: at a last drawn salary of ₹80,000, 20 years of service gives ₹9,23,077. And every amount in this table sits well inside the ₹20 lakh tax-free limit for private-sector employees, so the full sum would come to you untaxed.
Frequently asked questions
Who is eligible for gratuity in India?
Employees who complete at least 5 years of continuous service with one employer qualify under the Payment of Gratuity Act, which applies to establishments with 10 or more employees. Service of 4 years and 10 months counts as 5 years.
How is gratuity calculated?
Gratuity = (last drawn monthly salary × 15 ÷ 26) × years of service. The salary is basic plus dearness allowance. The 15/26 factor stands for 15 days' wages per year of service, with 26 taken as the working days in a month. A fraction of a year above six months rounds up to a full year.
Is gratuity tax-free in India?
For private-sector employees, gratuity up to ₹20 lakh is tax-free — a lifetime cap across all employers — and anything above is taxable. Government employees get full exemption on their entire gratuity.
When is gratuity paid after leaving a job?
The employer must work out the amount and pay it within 30 days of it becoming payable — that means from your last working day on resignation, retirement or termination. Late payment can attract interest.
What can I do if my employer doesn't pay gratuity?
You can file a claim with the Controlling Authority appointed under the Payment of Gratuity Act in your area. The authority can order the employer to pay the gratuity plus interest for the delay.
Is gratuity paid only on retirement, or also when I resign?
Gratuity is paid whenever your employment ends after at least 5 years of continuous service — resignation, retirement and termination all count. On death or disablement it is paid even if the 5 years are not complete.