Gratuity Calculator
Calculate the gratuity payable to you based on your last drawn salary and years of service.
India-specific calculator. It uses Indian rules, rates and rupee amounts, and the currency selector is switched off on this page.
The gratuity calculator works out the lump sum an employer pays for long service. For employees covered by the Payment of Gratuity Act, the formula is 15 days\u2019 salary for every completed year of service, using a 26-day working month.
How to use the calculator
- Enter your last drawn monthly salary (basic + DA).
- Enter your years of service — gratuity needs at least five years.
- Select whether you are covered by the Gratuity Act.
- The calculator applies the cap of ₹20 lakh that applies to tax-exempt gratuity.
How it is calculated
Not covered: G = Salary × 15 ÷ 30 × Years
Worked example
₹50,000 salary and 10 years of service (Act covered)
G = 50,000 × 15 ÷ 26 × 10 = ₹2,88,461
The whole amount is within the ₹20 lakh exemption limit, so it is tax-free.
Who should use this calculator
- Employees leaving a job after five or more years of continuous service and checking what they are owed.
- Anyone retiring and wanting to verify the gratuity figure in their final settlement.
- HR and payroll teams validating a gratuity calculation before releasing payment.
- Employees negotiating an exit and wanting an independent number to compare against the offer.
Common mistakes to avoid
- Using gross salary instead of basic plus DA. Gratuity is calculated on the last drawn basic pay plus dearness allowance, which is a much smaller figure than your total salary.
- Assuming the five-year rule is always strict. Continuous service of five years is required, but the rule is relaxed in cases of death or disablement, and service beyond six months in the final year usually rounds up.
- Expecting unlimited tax exemption. The exempt amount is capped at ₹20 lakh across employers; anything above that is added to your taxable income.
- Forgetting that the employer may pay more. The statutory formula sets a minimum for covered employees — a company can be more generous, so compare the offer rather than assuming it is wrong.
- Resigning just short of five years. A few weeks can be worth a substantial sum, so check your exact service period before you decide on a notice date.
The 15/26 formula and why it is used
Employees covered by the Payment of Gratuity Act receive 15 days of salary for each completed year of service: salary × 15 ÷ 26 × years. The 26 comes from treating a working month as 26 days, which is why the multiplier is not simply half a month.
On a last drawn basic plus DA of ₹50,000 and ten years of service, that is ₹2,88,461 — comfortably inside the ₹20 lakh exemption limit, so the whole amount is tax-free. Employees outside the Act use 15 ÷ 30 instead, which produces a smaller figure. Either way, gratuity is one of the few long-service benefits that arrives as a single, largely tax-free payment at the end of a career.
Gratuity terms explained
- Payment of Gratuity Act
- The law that makes gratuity payable to employees after five years of continuous service with an employer covered by it.
- Continuous service
- Unbroken service with the same employer. Service beyond six months in the last year is usually rounded up to a full year.
- 15/26 formula
- Fifteen days of salary per completed year, with a month treated as 26 working days.
- ₹20 lakh exemption
- The maximum gratuity that is exempt from tax, counted across all employers in your working life.
- Non-covered employees
- Those whose employer is outside the Act use 15 ÷ 30, giving a smaller amount unless the contract says otherwise.
Gratuity is one line in a larger settlement
When you leave a job, the final settlement usually combines several payments: gratuity, your provident fund balance, any pending salary, leave encashment, bonus or variable pay and, in some cases, notice pay. Gratuity is only one of them and it is calculated separately, so a settlement that looks low is not necessarily a gratuity error. Check each component against your records before you query the total: PF can be verified from your EPFO passbook, leave encashment from your leave balance, and gratuity from the formula on this page. Knowing which number is wrong makes the conversation with payroll far quicker.
Frequently asked questions
When am I eligible for gratuity?
You become eligible after five years of continuous service with the same employer. The five-year rule is relaxed if service ends due to death, disability or, in some cases, termination without fault.
How much gratuity is tax-free?
For employees covered by the Gratuity Act, the least of the actual gratuity, ₹20 lakh, and 15 days\u2019 salary per year of service is exempt from tax. Anything above the exempt limit is added to your taxable income.
Is gratuity calculated on gross or basic salary?
Gratuity is calculated on the last drawn salary, which for this purpose means basic pay plus dearness allowance — not your full gross salary including HRA and special allowances.