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 applies to establishments with 10 or more employees. For every completed year of service, you earn 15 days' wages — and since a month is taken to have 26 working days, the statutory formula is:
Gratuity = (last drawn monthly salary × 15 ÷ 26) × years of service
"Last drawn salary" means your basic salary plus dearness allowance at the time of leaving; allowances like HRA and conveyance are not included. Years of service can include fractions — and importantly, a fraction of a year over six months is rounded up to a full year. So 6 years and 8 months counts as 7 years, while 6 years and 4 months counts as 6.
Worked example
Say your last drawn basic + DA is ₹50,000 per month and you've completed 6 years of service:
- 15 days' wages = ₹50,000 × 15 ÷ 26 = ₹28,846.15
- Gratuity = ₹28,846.15 × 6 = ₹1,73,077
- Since this is below ₹20 lakh, the entire amount is tax-free for a private-sector employee.
Eligibility and tax rules in India
- 5-year rule: you must complete 5 years of continuous service with the same employer. Courts have accepted 4 years and 10 months as continuous service of 5 years. The rule doesn't apply if you die or become disabled — then gratuity is paid regardless of tenure.
- Tax: private-sector employees get exemption up to ₹20 lakh — a lifetime limit across all employers. Amounts above that are taxable as salary. Government employees enjoy full exemption on the entire gratuity.
- Payment timeline: the employer must determine the amount and pay it within 30 days of it becoming payable (your last working day). Delayed payment can attract simple interest.
- Nomination: you can nominate a family member to receive your gratuity — worth doing if you haven't already, since the paperwork is much simpler for nominees.
Frequently asked questions
Who is eligible for gratuity in India?
Employees who complete at least 5 years of continuous service with one employer are eligible under the Payment of Gratuity Act, which covers establishments with 10 or more employees. A service of 4 years and 10 months is treated 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 represents 15 days' wages per year of service, with 26 being 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 the entire gratuity amount.
When is gratuity paid after leaving a job?
The employer must determine the amount and pay it within 30 days of it becoming payable — 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 direct the employer to pay the gratuity along with interest for the delay.