Gratuity Calculator
By Santaji GadepatilinUpdated October 27, 2026
Gratuity is a lump sum paid by an employer when an employee leaves after five or more years of service. In India, it is calculated under the Payment of Gratuity Act.
How to use the gratuity calculator
Enter your last drawn monthly basic salary plus dearness allowance and your years of service. Choose whether your employer is covered by the gratuity law — almost all organisations with 10 or more employees are. You see the gratuity amount, the tax-exempt part and any taxable part.
The gratuity formula
Employers covered by the law
Gratuity = 15 × last drawn (basic + DA) × years of service ÷ 26
Years of service are rounded: more than 6 months in the final year counts as a full year.
Employers not covered
Gratuity = 15 × average (basic + DA) × completed years ÷ 30
Only completed years count, and the average salary of the last 10 months is used.
Worked example
Basic + DA of ₹50,000 a month, 10 years 8 months of service, covered employer:
- Years counted = 11 (8 months is more than 6)
- Gratuity = 15 × 50,000 × 11 ÷ 26 = ₹3,17,308
- Fully tax-free, as it is below ₹20 lakh.
Gratuity by salary and service
| Basic + DA | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| ₹25,000 | ₹72,115 | ₹1,44,231 | ₹2,88,462 | ₹4,32,692 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹5,76,923 | ₹8,65,385 |
| ₹1,00,000 | ₹2,88,462 | ₹5,76,923 | ₹11,53,846 | ₹17,30,769 |
| ₹1,50,000 | ₹4,32,692 | ₹8,65,385 | ₹17,30,769 | ₹25,96,154 |
Eligibility
- Permanent employees: 5 years of continuous service.
- Fixed-term employees: 1 year, under the Code on Social Security.
- Death or disability: no minimum service. Gratuity goes to the nominee.
- Gratuity is paid on retirement, resignation, termination (except for misconduct) or death.
Wages under the new labour codes
The labour codes require basic pay plus DA to be at least 50% of total pay. If your employer restructures your salary to meet this, your basic rises and so does your gratuity.
Tax on gratuity
- Private-sector employees: exempt up to ₹20,00,000 across your career.
- Government employees: exempt up to ₹25,00,000.
- Any amount above the limit is added to income and taxed at slab rates.
Keep in mind
Employers must pay gratuity within 30 days of it becoming due, or pay interest on the delay. Check your appointment letter for any gratuity scheme more generous than the law.
Frequently asked questions
What is the gratuity formula?
For employers covered by the law, gratuity = 15 × last drawn basic + DA × years of service ÷ 26. The 15 stands for 15 days’ wages per year and 26 for working days in a month.
How much gratuity for 10 years with ₹50,000 basic?
15 × 50,000 × 10 ÷ 26 = ₹2,88,462. With 10 years 8 months, service rounds up to 11 years and gratuity is about ₹3,17,308.
How are years of service rounded?
Under the gratuity law, a final part-year of more than 6 months counts as a full year. 7 years 8 months becomes 8 years; 7 years 5 months stays 7.
Who is eligible for gratuity?
Permanent employees after 5 years of continuous service. Under the new labour codes, fixed-term employees become eligible after 1 year. There is no minimum on death or disability.
Is gratuity taxable?
For private employees gratuity is tax-free up to ₹20 lakh over your whole career. Government employees get up to ₹25 lakh. Anything above is taxed at your slab rate.