About the Gratuity Calculator
This gratuity calculator estimates the lump sum an employer in India pays when you resign, retire or leave after long service. For covered employers — those with 10 or more employees, under the Payment of Gratuity Act, 1972, whose rules now sit in Chapter V of the Code on Social Security, 2020 (in force since 21 November 2025) — gratuity is 15 days of last drawn wages (basic pay plus dearness allowance) for every completed year of service, where a month has 26 working days — hence the 15/26 formula.
Service beyond six months in the final year counts as a full year for covered employees, so 7 years and 7 months is treated as 8 years. For organisations not covered by the Act, gratuity is commonly calculated on half a month’s salary (15/30) per completed year. You normally need five years of continuous service to qualify, except on death or disablement; the eligibility check here applies that rule for permanent employees, while fixed-term employees qualify after one year under the Code on Social Security.
Gratuity up to ₹20 lakh received by private-sector employees is exempt from income tax; any higher amount (for example an ex-gratia top-up) is taxable as salary. Use this for resignation planning, retirement estimates or checking a full-and-final settlement.
With the default inputs, the gratuity payable is ₹288,461.54. Change any value above to recalculate instantly.
How to use the gratuity calculator
- 1Enter your last drawn monthly basic salary plus dearness allowance.
- 2Enter completed years of service and any extra months.
- 3Choose whether your employer is covered by the Gratuity Act.
- 4Tick death or disablement if the five-year rule should be waived.
- 5Read the gratuity amount and how much of it is tax-free.
Formula and method
Under Section 4 of the Payment of Gratuity Act, a covered employee earns 15 days of wages for each completed year of service. Monthly wages are treated as covering 26 working days, so one year is worth (Basic + DA) × 15 ÷ 26. Service of more than six months in the final year is rounded up to a full year.
Employers outside the Act usually pay half a month’s average salary per completed year, i.e. salary × 15 ÷ 30, and part-years are ignored. For tax, gratuity is exempt up to ₹20 lakh in a lifetime for non-government employees; central and state government employees’ gratuity is fully exempt.
- Basic + DA
- Last drawn monthly basic salary plus dearness allowance
- 15
- Days of wages paid per year of service
- 26
- Working days per month assumed by the Act
Worked examples
₹50,000 basic + DA, 10 years
₹50,000 × 15 ÷ 26 = ₹28,846 per year of service. Ten years gives ₹2,88,462, fully within the ₹20 lakh tax-free limit.
7 years 8 months at ₹75,000
Eight months is more than six, so service is rounded up to 8 years: ₹75,000 × 15 ÷ 26 × 8 = ₹3,46,154.
Employer not covered by the Act
Outside the Act only completed years count and the divisor is 30: ₹60,000 × 15 ÷ 30 × 12 = ₹3,60,000.
30 years at ₹1,50,000 — above the tax-free limit
The formula gives ₹25,96,154. The first ₹20 lakh is tax-free and the remaining ₹5,96,154 is taxed as salary.
Frequently asked questions
What is the formula for gratuity?+
For employers covered by the Payment of Gratuity Act: last drawn (basic + DA) × 15 ÷ 26 × years of service. For others it is usually (basic + DA) × 15 ÷ 30 × completed years.
Am I eligible for gratuity before 5 years?+
Permanent employees normally need five years of continuous service; the condition is waived on death or disablement, and some High Courts have treated 4 years and 240 days as five years. Under the Code on Social Security, 2020, in force since 21 November 2025, fixed-term employees qualify after one year of service.
Does the 50% wage rule change my gratuity?+
Under the Code on Social Security, “wages” for gratuity are basic pay, DA and retaining allowance, but if excluded allowances (HRA, conveyance, special allowance and similar) exceed 50% of total pay, the excess is added back to wages. If your basic + DA is below half your pay, enter the adjusted figure for a more accurate estimate.
How much gratuity is tax-free?+
Private-sector employees can receive up to ₹20 lakh of gratuity tax-free over their career under Section 10(10). Government employees’ gratuity is fully exempt. Amounts above the limit are taxed as salary.
Does 6 months count as a full year for gratuity?+
For covered employers, service of more than six months in the last year counts as a full year. Exactly six months does not; six months and one day does.
Is HRA included in gratuity calculation?+
No. Gratuity uses basic salary plus dearness allowance (and commission based on a fixed percentage of turnover, if any). HRA, bonus, overtime and other allowances are excluded.
What is the maximum gratuity payable?+
The ceiling under the Payment of Gratuity Act is ₹20 lakh. Employers may pay more voluntarily, but any amount above the tax exemption limit is taxable.
Results are general estimates and not legal advice. Laws vary by jurisdiction — consult a qualified attorney.