Gratuity Calculator
Estimate your gratuity under the Payment of Gratuity Act, 1972. Enter your last drawn monthly salary (Basic + DA) and years of service to see your gratuity amount, capped at the ₹20 lakh statutory maximum.
Enter completed years; a final part-year of 6 months or more is counted as a full year for covered employers.
Most companies with 10 or more employees are covered (divisor 26). Not-covered employers use divisor 30.
(15 × ₹50,000 × 7) ÷ 26 = ₹2,01,923
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Gratuity Formula
Under the Payment of Gratuity Act, 1972, gratuity for a covered employer is (15 × last salary × years) ÷ 26 (Basic + DA), and ÷ 30 for a not-covered employer, capped at ₹20,00,000. Example: ₹50,000 last salary and 7 years of covered service is (15 × 50,000 × 7) ÷ 26 = about ₹2,01,923.
Gratuity by Years of Service
Projected gratuity at your current last-drawn salary and coverage, for common service lengths (capped at ₹20 lakh):
| Years of Service | Gratuity Amount |
|---|
This calculator shows the gross statutory gratuity before any tax treatment. Actual eligibility and payment depend on your employment terms; consult your employer or a professional for your exact entitlement.
How Gratuity Is Calculated
Gratuity is a lump sum an employer pays you as a thank-you for long service. In India it is governed by the Payment of Gratuity Act, 1972, which applies to factories, mines, plantations, shops, and any establishment with ten or more employees. A gratuity calculator takes the two numbers that drive the entitlement — your last drawn salary and how long you have worked — and applies the statutory formula so you know roughly what you are owed when you leave.
For an employer covered by the Act, the formula is:
Gratuity = (15 × last drawn salary × years of service) ÷ 26
Here "last drawn salary" means your monthly Basic pay plus Dearness Allowance (not your full CTC), and 26 represents the assumed number of working days in a month — the logic being that gratuity is worth 15 days' wages for every completed year. If your employer is not covered by the Act, the same 15-days-per-year idea is applied over a full 30-day month, so the divisor becomes 30 instead of 26, which produces a slightly smaller figure for the same inputs.
A worked example
Suppose your last drawn Basic + DA is ₹50,000 and you have completed 7 years at a covered company. The gratuity is (15 × 50,000 × 7) ÷ 26, which works out to about ₹2,01,923. At a not-covered company the same service would give (15 × 50,000 × 7) ÷ 30, or ₹1,75,000. The table above shows how the amount grows as your service lengthens, so you can see the reward for staying on.
The five-year eligibility rule
Gratuity is not payable from day one. As a rule you must complete at least five years of continuous service with the same employer to qualify. There is one important exception: if employment ends because of death or disablement, the five-year condition is waived and gratuity is payable for whatever service was rendered. This is why the calculator flags a warning when you enter fewer than five years — the formula still produces a number, but in most ordinary cases that amount would not actually be payable.
How part-years are rounded
Service rarely ends on a neat anniversary, so the Act includes a rounding rule for the final year. For a covered employer, if you work six months or more into your last year it is rounded up and counted as a full year; less than six months is dropped. So 7 years and 8 months is treated as 8 years, while 7 years and 4 months is treated as 7. For a not-covered employer only fully completed years are counted, with no rounding up. The calculator applies whichever rule matches the coverage you select and shows the exact number of years it used.
The ₹20 lakh ceiling
However long you serve or however high your salary, statutory gratuity is capped at ₹20,00,000. This ceiling was raised from ₹10 lakh by a 2018 amendment. If the formula produces more than ₹20 lakh — which can happen for senior employees with very long tenures — the payable amount is limited to the cap, and the calculator shows both the formula figure and the capped result. An employer is free to pay more than the statutory gratuity as a matter of policy, but the extra is not "statutory gratuity" and is treated differently for tax.
Tax on gratuity
Gratuity enjoys a generous tax exemption. For central and state government employees it is entirely tax-free. For other employees covered by the Act, gratuity is exempt up to the least of three figures: ₹20 lakh, the actual gratuity received, or the amount worked out by the statutory formula. Anything above that limit is added to your income and taxed at your slab rate. Because the exemption is a lifetime limit across employers, receiving gratuity more than once in a career draws down the same ₹20 lakh allowance. The figure shown here is the gross statutory gratuity before any of this tax treatment is applied.
Which salary figure to use
The most common mistake when estimating gratuity is using the wrong salary. The Act counts only your Basic pay plus Dearness Allowance — not your gross salary, and definitely not your full cost-to-company (CTC). Allowances such as HRA, conveyance, special allowance, bonuses, and the value of perks are all excluded. Because Basic + DA is often just 40–50% of total pay, plugging in your CTC would overstate your gratuity by roughly double. Always take the last month's Basic + DA figure from your payslip, and use the amount at the time of leaving, since gratuity is based on your last drawn salary rather than an average.
When gratuity is paid
Gratuity becomes due when you leave a qualifying job — on retirement, resignation, superannuation, or in the unfortunate cases of death or disablement. The employer is required to pay it within thirty days of it becoming payable, and delayed payment attracts simple interest. Use this calculator to estimate the amount before you resign or retire so you can factor it into your financial plan, and remember to base the salary field on your Basic + DA rather than your total pay, since that is what the law uses.
Gratuity Calculator — Frequently Asked Questions
For a covered employer, gratuity = (15 × last drawn monthly salary × years of service) ÷ 26, where salary is Basic + DA and 26 is the assumed working days in a month. For a not-covered employer the divisor is 30. Example: ₹50,000 last salary and 7 years of covered service gives (15 × 50,000 × 7) ÷ 26 = about ₹2,01,923.
You generally need at least five years of continuous service with the same employer. The five-year condition is waived if service ends due to death or disablement, in which case gratuity is payable regardless of tenure.
For a covered employer, six months or more in your final year is counted as a full year, while less than six months is dropped. So 7 years 7 months counts as 8 years, but 7 years 4 months counts as 7 years. For a not-covered employer only completed years are counted.
The statutory maximum gratuity is ₹20,00,000 (raised from ₹10 lakh by the 2018 amendment). If the formula produces more, it is capped at ₹20 lakh. An employer may pay more voluntarily, but the excess is treated differently for tax.
Gratuity received by government employees is fully tax-exempt. For other employees covered by the Act, gratuity is exempt up to the least of ₹20 lakh, the actual gratuity received, or the statutory-formula amount; anything above is taxable as salary. This calculator shows the gross gratuity before tax.