Gratuity Calculator
Calculate gratuity amount based on years of service and last drawn salary
Employment Details
Enter your last drawn basic salary + DA
Completed years with current employer
About Gratuity (2026)
Eligibility: Minimum 5 years of continuous service required
Formula: (Last Salary × 15 days × Years of Service) / 26
Maximum Limit: ₹20,00,000 as per Payment of Gratuity Act
Tax: Gratuity up to ₹20 lakhs is tax-exempt for salaried employees
Frequently Asked Questions
What is gratuity and who is eligible for it?
Gratuity is a lump sum payment made by employer to employee as a retirement benefit. Eligibility: You must complete minimum 5 years of continuous service (except in case of death/disability). Covered under Payment of Gratuity Act, 1972 for companies with 10+ employees.
How is gratuity calculated?
Formula: (Last drawn salary × 15 days × Years of service) / 26. 'Last drawn salary' includes Basic + DA. Maximum limit is ₹20 lakhs as per law. Example: ₹50,000 salary, 10 years service = (50,000 × 15 × 10) / 26 = ₹2,88,462.
Is gratuity taxable?
For employees covered under the Gratuity Act, up to ₹20 lakh is tax-free. Amount beyond ₹20L is taxable as per your income tax slab. For government employees, entire gratuity is tax-free. For employees not covered under the Act, ₹10L exemption applies (whichever is less of actual/calculated amount).
When is gratuity paid?
Gratuity is paid at: (1) Retirement after 5+ years service, (2) Resignation after 5+ years, (3) Death or disability (no minimum tenure required), (4) Superannuation. Employer must pay within 30 days of gratuity becoming payable.
Can my employer refuse to pay gratuity?
No, if you've completed 5 years of service in a company with 10+ employees, gratuity is your legal right. Employer can refuse only if you're dismissed for moral turpitude, violence, or misconduct causing loss to employer. Otherwise, it's mandatory.
What happens to gratuity if I change jobs?
Gratuity is employer-specific. If you leave before 5 years, you're not eligible (exceptions: death/disability). After 5 years, you get gratuity from that employer. In new job, your gratuity clock starts from zero. Each employer pays separately based on their tenure.
How to Use This Calculator
- 1
Enter your last drawn monthly salary (Basic + Dearness Allowance). Don't include HRA, bonuses, or other allowances.
- 2
Input your completed years of service with your current employer. Partial years can be entered as decimals (e.g., 10.5 years).
- 3
Click 'Calculate Gratuity' to see your gratuity amount as per the legal formula.
- 4
The result shows your estimated gratuity payment, which will be paid when you retire, resign (after 5 years), or in case of death/disability.
Key Terms & Definitions
- Gratuity
- A retirement benefit paid by employer to employee for long service, calculated based on last salary and tenure.
- Payment of Gratuity Act, 1972
- Indian law governing gratuity payments, eligibility, calculation, and maximum limits for employees.
- Continuous Service
- Uninterrupted employment with the same employer. Includes authorized leave, layoff, strike, and lock-out periods.
- Last Drawn Salary
- Last month's Basic + DA. Does not include HRA, bonuses, commissions, or other allowances.
- 15 Days Salary
- In the gratuity formula, '15 days' refers to 15/26 of monthly salary (assuming 26 working days in a month).
Formulas & Calculations
Gratuity Calculation Formula
Salary = Basic + DA only. Example: ₹60,000 salary, 8 years service = (60,000 × 15 × 8) / 26 = ₹2,76,923. Maximum capped at ₹20 lakh.
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