Gratuity Calculator
Gratuity payable under the Payment of Gratuity Act, 1972.
Calculation breakdown
| Item | Value |
|---|---|
| Last drawn basic + DA (monthly) | ₹50,000 |
| Years counted | 10 |
| Formula | 15/26 × salary × years |
| Formula amount (uncapped) | ₹2,88,462 |
| ₹20 lakh cap applied | No |
| Gratuity payable | ₹2,88,462 |
Gratuity is a lump sum your employer pays for long service, governed in India by the Payment of Gratuity Act, 1972. Once you complete five years of continuous service you are entitled to 15 days of your last drawn basic plus DA for every year worked. This calculator applies the statutory formula and the ₹20 lakh ceiling instantly.
Move the sliders to set your last drawn monthly basic plus dearness allowance and your total years of service, then choose whether your employer is covered under the Act — that single switch changes the divisor from 26 to 30 and changes how part-years are counted, so it can move the payout by tens of thousands of rupees.
How is gratuity calculated?
For an employer covered by the Act, gratuity = (15 ÷ 26) × last drawn monthly basic + DA × years of service. The 26 represents working days in a month after excluding Sundays, so 15/26 is literally 15 days of pay per completed year. Service is rounded to the nearest year: any fraction of more than six months counts as a full year, while six months or less is dropped.
Take a last drawn basic + DA of ₹50,000 and 10 years of service: (15 ÷ 26) × 50,000 × 10 = ₹2,88,462. If the same employee had worked 10 years and 8 months, the fraction exceeds six months, service rounds up to 11 years and the payout becomes ₹3,17,308 — one extra year is worth ₹28,846 here. If the employer is not covered by the Act, the divisor becomes 30 and only completed years count, so the same 10-year service pays (15 ÷ 30) × 50,000 × 10 = ₹2,50,000.
How to use this calculator
- Enter your last drawn monthly basic salary plus dearness allowance — not your gross salary or CTC. HRA, bonuses and reimbursements are excluded.
- Set your total years of continuous service, using the half-year steps for part years.
- Pick 'Covered under Act' if your establishment employed 10 or more people on any day in the preceding 12 months — that covers most factories, shops and companies.
- Read the gratuity payable and the 'years counted' figure, which shows how the rounding rule treated your part year.
- Open the calculation breakdown to see the uncapped formula amount and whether the ₹20 lakh ceiling was applied.
Gratuity rules every Indian employee should know
The five-year rule has one important exception: if service ends because of death or disablement, gratuity is payable regardless of how long the employee worked, and it is calculated on the service that would have been rendered up to the date of the event in death cases. Otherwise you must complete five years of continuous service with the same employer — resigning at four years and eleven months forfeits the entire amount, although courts in some jurisdictions have held that 4 years and 240 days counts as the fifth year for employees working a 6-day week.
On tax, gratuity received by government employees is fully exempt. For everyone else, the exemption is the least of the actual gratuity received, the formula amount, or ₹20,00,000 — a lifetime ceiling across all employers, which is why this calculator caps the payable figure at ₹20 lakh. Anything above the exempt amount is taxed at your slab rate. Procedurally, apply in Form I within 30 days of leaving; the employer must pay within 30 days of the gratuity becoming payable, failing which simple interest is payable on the delayed amount.
Frequently asked questions
Who is eligible for gratuity in India?
Any employee who completes five years of continuous service with an employer covered by the Payment of Gratuity Act, 1972 is eligible on resignation, retirement or termination. The Act applies to factories, mines, plantations, shops and establishments that employed 10 or more people on any day in the preceding 12 months.
What is the 15/26 gratuity formula?
Gratuity equals (15 ÷ 26) × last drawn monthly basic plus DA × years of service. The 15 stands for 15 days of wages per completed year and the 26 for working days in a month after excluding Sundays. Employers outside the Act use 15/30 — half a month's salary per year — and count only completed years.
Do I get gratuity if I leave before 5 years?
Normally no — five years of continuous service is the statutory threshold. The exception is death or disablement due to accident or illness, where gratuity is payable regardless of tenure and is paid to the nominee or legal heir. Some courts have also accepted 4 years and 240 days as qualifying for the fifth year.
How are part years counted for gratuity?
Under the Act, a fraction of more than six months rounds up to a full year, while six months or less is ignored. So 10 years 7 months counts as 11 years, but 10 years 6 months counts as 10. Employers not covered by the Act count only fully completed years, with no rounding up at all.
Is gratuity taxable in India?
Gratuity for government employees is fully tax-free. For private-sector employees the exemption is the lowest of the actual amount received, the statutory formula amount, or ₹20 lakh — and that ₹20 lakh is a lifetime limit across all employers. Any excess is added to your salary income and taxed at your slab rate.
When must my employer pay the gratuity?
You should submit Form I within 30 days of the amount becoming payable, and the employer must pay within 30 days of that date. If payment is delayed beyond 30 days the employer owes simple interest on the amount for the delay period, and unresolved claims can be taken to the Controlling Authority under the Act.
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Disclaimer: results are estimates based on the inputs and published rules/rates, for information only — not investment, tax or legal advice. Verify important decisions with a qualified professional. See our full disclaimer.