Employee Benefits

Gratuity Calculator

Calculate your gratuity payout based on last drawn salary and years of service. Uses the Payment of Gratuity Act formula for accurate results.

Service Details

Basic Salary + Dearness Allowance

Minimum 5 years for eligibility

6+ months rounded up to 1 year

Estimated Gratuity Amount

Last Drawn Salary

Effective Service

Gratuity Payout

Tax Exemption

Gratuity Growth by Years of Service

Gratuity at Different Service Lengths

Years of Service Gratuity Amount Tax-Free Limit

Gratuity calculation uses the standard formula under the Payment of Gratuity Act, 1972. For employees not covered, 15/30 is used instead of 15/26. Tax exemption limit is ₹20 lakh for government employees covered under Gratuity Act.

What is Gratuity and How is it Calculated?

Gratuity is a retirement benefit paid by an employer to an employee as a token of appreciation for long service. Under the Payment of Gratuity Act, 1972, any employee who has completed 5 or more years of continuous service is eligible for gratuity upon resignation, retirement, or superannuation.

The gratuity formula for employees covered under the Act is: Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26. Here, "last drawn salary" means Basic Salary + Dearness Allowance (DA). The divisor 26 represents the working days in a month. For employees not covered under the Act, the divisor is 30 (calendar days).

If the total service period includes more than 6 months beyond completed years, it is rounded up. For example, 7 years and 8 months is treated as 8 years for gratuity calculation.

How to Use This Gratuity Calculator

  1. 1

    Enter your last drawn salary

    This should be your Basic Salary + Dearness Allowance (DA) per month. Do not include HRA, bonuses, or other allowances — only basic + DA is used for gratuity calculation.

  2. 2

    Enter years and months of service

    Enter your total completed years of service and any additional months. If additional months are 6 or more, the calculator rounds up to the next year as per the Gratuity Act.

  3. 3

    Select employee type

    Companies with 10+ employees are covered under the Gratuity Act (uses 15/26 formula). Others use the 15/30 formula. Most salaried professionals in India fall under the Gratuity Act.

  4. 4

    View your gratuity amount and tax status

    See the exact gratuity payout, the formula used, and the growth table showing how your gratuity would change at different service lengths.

Gratuity Tax Rules in India

Government Employees

Gratuity received by central/state government employees is fully exempt from income tax. There is no upper limit on the tax-free gratuity amount for government employees.

Private Sector (Covered)

For employees covered under the Payment of Gratuity Act, the tax-free limit is the least of: actual gratuity received, ₹20 lakh (as per Section 10(10) of the Income Tax Act), or the formula amount (15/26 × salary × years). Any amount above this limit is taxable.

Private Sector (Not Covered)

For employees not covered under the Act, the tax-free limit is the least of: actual gratuity, ₹20 lakh, or half month's salary for each completed year (using average of last 10 months' salary).

5-Year Rule

To be eligible for gratuity, you must complete at least 5 years of continuous service with the same employer. The only exceptions are death or disability, where gratuity is payable regardless of tenure.

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FAQs

Frequently asked questions

What is the formula for gratuity calculation?
For employees covered under the Payment of Gratuity Act: Gratuity = (15 x Last Drawn Salary x Years of Service) / 26. "Last Drawn Salary" means Basic + DA. The divisor 26 represents working days in a month. For employees not covered under the Act, the divisor is 30.

Am I eligible for gratuity?
You are eligible for gratuity if you have completed at least 5 years of continuous service with the same employer. The only exceptions are death or disability, where gratuity is payable regardless of tenure. The Gratuity Act applies to establishments with 10 or more employees.

Is gratuity taxable in India?
Gratuity up to 20 lakh is tax-free for private sector employees covered under the Gratuity Act. For government employees, the entire gratuity amount is tax-exempt. Any amount exceeding the tax-free limit is added to your taxable income for that year.

What if I have worked 4 years and 7 months — do I get gratuity?
If your total service exceeds 4 years and 6 months (i.e., the months beyond completed years are 6 or more), it is rounded up to 5 years, and you become eligible for gratuity. So 4 years 7 months counts as 5 years for gratuity purposes.