Gratuity Calculator

Last updated: Jul 22, 2026 | Reviewed by Calkulator Team | 2 min read

Tax

Check your gratuity eligibility and estimated amount

After 5 years of continuous service, you are entitled to gratuity = (Last basic × 15/26) × years of service. On a ₹50,000 basic after 8 years, gratuity is approximately ₹2.31 lakh — tax-free up to ₹20 lakh.

Courts have ruled that 4 years 240 days counts as 5 years for gratuity eligibility.

Service Details

Last Drawn Basic + DA (Monthly ?)

₹

Years of Service (min. 5 years)

yrs

Gratuity Formula (Payment of Gratuity Act)

Gratuity = (15 / 26) — Last Basic+DA — Years of Service

15 days wages per year of service (26 working days/month)

Tax Exemption: Up to ₹20,00,000 (₹20 lakh) is fully tax-free

Note: Minimum 5 years of continuous service required

Gratuity Amount

—

Gratuity Amount

—

Tax-Exempt (max ₹20L)

—

Taxable Gratuity

—

15 Days Wages

—

Per year of service

Calculation Breakdown

Last Basic + DA (Monthly)	—
15/26 — Basic	—
Years of Service	—
Gratuity = (15/26) — Basic — Years	—
Tax Exemption Limit	₹20,00,000
Tax-Exempt Amount	—
Taxable Amount	—

Live Result Illustration

Visual summary — updates instantly as you enter values above

LIVE

Real-Life Guide to Using the Gratuity Calculator

Gratuity on years of service. Use the examples and checks below to turn the number into a practical decision.

When this calculator is useful

Employees nearing five years at a company, or planning to resign, use this to estimate the lump-sum gratuity payout they are entitled to receive from their employer.

For most people, the best way to use the Gratuity Calculator is to try the real case first, then change one input at a time. That makes the trade-off visible. For example, with a loan calculator you can change tenure while keeping the same rate; with an investment calculator you can change return assumption while keeping the same monthly contribution; with a health, education or measurement calculator you can check how much one input changes the final category.

The result should answer a practical question: Can I afford this? How much should I save? Is this score enough? Is this measurement within range? What is the safer or cheaper option? If the output does not answer the decision clearly, adjust the inputs until the scenario matches your real situation.

Real-Life Example

Employee resigning after seven years: An employee with a last-drawn basic salary of ₹35,000/month (no separate DA) resigns after completing exactly 7 years and 4 months of continuous service.

1Since the extra 4 months is less than 6 months, service is rounded down to 7 years: gratuity = ₹35,000 × 15/26 × 7 = approximately ₹1,41,346.

2Now change one input, such as rate, time, quantity, unit or score, and compare the new result with the first one.

A few extra months beyond a full year of service can round down to nothing in the gratuity formula, so timing a resignation just past a service-year milestone matters more than it might seem.

Practical Advice

Use the Gratuity Calculator as a planning tool, not just a number generator. Write down the inputs you used, because the final answer is meaningful only when you remember the assumptions behind it.

If the decision affects money, health, tax, safety, academics or legal compliance, keep a second check ready. That second check may be a bank quote, payslip, official rule, prescription, site measurement, mark sheet or invoice.

Common Mistakes

Assuming gratuity is calculated on gross or CTC salary — it is actually calculated only on the last drawn basic salary plus dearness allowance, ignoring HRA and other allowances entirely.
Not knowing that eligibility generally requires completing a minimum of five years of continuous service under the currently applicable rule, with a narrower exception for cases like death or disability.
Using 12 months instead of 26 working days per month in the formula — the standard calculation uses (basic+DA) × 15/26 × number of years of service, not a simple 15-days-per-year-of-basic-monthly-salary shortcut.
Rounding years of service incorrectly — service of more than six months in the final year is typically rounded up to the next full year, which employees often miscalculate in either direction.
Assuming gratuity is unlimited — there is a maximum payout cap under the currently applicable rule, beyond which any additional amount an employer chooses to pay is treated as an ex-gratia payment rather than statutory gratuity, with different tax treatment.

How to Interpret Results

The figure shown is the estimated statutory gratuity lump sum based on your last-drawn basic+DA and completed years of service; compare it against your actual full-and-final settlement to check the employer applied the correct formula and rounding of service years.

A good interpretation looks at both the main result and the supporting values. If a page shows totals, ratios, categories, schedules or warnings, read those together instead of focusing only on the biggest number.

Gratuity Calculator FAQs

Useful answers for interpreting the output, avoiding mistakes and using the result responsibly.

What salary figure does this calculator use for gratuity?

It uses your last drawn basic salary plus dearness allowance (if applicable) — not your gross salary, CTC, or take-home pay — since the statutory formula is defined only in terms of basic and DA.

How many years of service do I need before I am eligible?

Under the currently applicable rule, continuous service of five years is generally required, except in cases of death or disability where the five-year requirement doesn't apply.

What is the exact formula being used?

The standard formula is (last drawn basic + DA) × 15 ÷ 26 × number of completed years of service, where 26 represents the assumed working days in a month and 15 represents half a month's wage per year of service.

If I worked 6 years and 7 months, how are the extra months counted?

Service beyond a full year that exceeds six months is typically rounded up to the next full year, while a period of six months or less is usually ignored — so 6 years 7 months would generally be treated as 7 years.

Is there a maximum limit on gratuity payout?

Yes, there is a statutory ceiling on the tax-exempt/mandatory gratuity amount under the currently applicable rule; any amount an employer pays beyond that cap is usually treated as a discretionary ex-gratia payment rather than statutory gratuity.

Is the gratuity amount taxable?

Gratuity received by employees covered under the Payment of Gratuity Act is generally exempt up to the statutory ceiling; amounts above that ceiling, or gratuity for employees not covered by the Act, may be taxed differently, so this needs case-specific checking.

Does gratuity apply if I am terminated for misconduct?

Gratuity can be forfeited, in part or fully, in cases of termination for proven misconduct involving moral turpitude or willful damage, subject to due process — it is not automatically payable in every exit scenario.

Why does my HR-calculated gratuity differ from this estimate?

Differences usually come from a mismatch in the basic+DA figure used, a different rounding treatment for part-year service, or company-specific policies (some employers apply a more generous formula than the statutory minimum) — ask HR for their exact basic and years-of-service figures used.

What is a Gratuity Calculator?

Gratuity is a lump-sum payment made by an employer to an employee as a reward for long service, typically paid at retirement, resignation (after 5+ years), or death/disability. It is governed by the Payment of Gratuity Act, 1972 and applies to organisations with 10+ employees.

The standard formula is: Gratuity = (Last Drawn Basic + DA) — 15/26 — Years of Service. Note that 26 working days per month are considered and 15 days' salary is paid per year. Gratuity up to ₹20 Lakhs is fully tax-exempt for most employees.

Example Calculation

Scenario: Mr. Arun Kumar, who served 8 years and 7 months at Wipro — Last drawn Basic + DA = ₹45,000/month, now leaving for a new role at Infosys

1Years of service = 8 years 7 months → rounded to 9 years (any fraction above 6 months rounds up)

2Gratuity = (₹45,000 — 15 — 9) / 26 = ₹60,75,000 / 26 = ₹2,33,654

3This is below ₹20 Lakh threshold → Entire ₹2,33,654 is tax-free

✓ Result: Mr. Arun receives ₹2,33,654 as gratuity from Wipro — fully tax-exempt under Income Tax Act.

How to Use the Gratuity Calculator

Enter your last drawn Basic Salary + Dearness Allowance (DA) as a monthly amount — this is what's mentioned on your final salary slip.
Enter your total years of service at the company — minimum 5 years is required for gratuity eligibility. Enter decimals (e.g., 8.7 for 8 years 8 months).
Click Calculate Gratuity to see your gratuity amount, the tax-exempt portion (up to ₹20 lakh), and any taxable amount above the exemption limit.

Benefits

Instantly calculates statutory gratuity entitlement under the Payment of Gratuity Act
Shows tax-exempt portion (up to ₹20 lakh) — key for financial exit planning
Helps verify whether your employer's gratuity payment is accurate
Service rounding logic built in — automatically rounds up months above 6
Useful at the time of resignation, retirement, or job switching

Key Terms

Payment of Gratuity Act, 1972: The law mandating gratuity payment for employees with 5+ years of continuous service in establishments employing 10 or more workers.
Basic + DA: Dearness Allowance (a cost-of-living adjustment component) is included along with basic salary in the gratuity base calculation. HRA and other allowances are excluded.
15/26 Formula: Gratuity = 15 days' wages per year of service, where a month is assumed to have 26 working days (not 30). This is the statutory formula under the Act.
₹20 Lakh Exemption: Gratuity up to ₹20 lakh is fully tax-exempt for employees under the Payment of Gratuity Act. Government employees enjoy unlimited gratuity tax exemption.
Service Rounding: If the last year of service has more than 6 months, it rounds up to a full year. E.g., 8 years 7 months = 9 years; 8 years 5 months = 8 years for gratuity calculation.

Frequently Asked Questions

Am I eligible for gratuity if I resign before 5 years?

No — the Act requires minimum 5 years of continuous service. However, some court judgments have ruled that completing 4 years and 240 days (approximately) may qualify. This is based on the interpretation that 240 working days equal a full year. Consult your HR or legal counsel for clarity in specific cases.

How are years of service rounded for gratuity calculation?

Service beyond 6 months in the final year rounds up to a full year. For example: 8 years 7 months counts as 9 years; 8 years 5 months counts as 8 years. The calculation is based on continuous service — breaks in service may affect eligibility depending on the circumstances.

Is gratuity taxable?

For employees covered under the Payment of Gratuity Act, gratuity up to ₹20 lakh is fully tax-exempt. Any gratuity above ₹20 lakh is taxable as salary income and TDS may be deducted. Government employees have unlimited gratuity tax exemption with no ceiling.

Within how many days must an employer pay gratuity?

Gratuity must be paid within 30 days of it becoming payable (resignation, retirement, etc.). Delayed payment attracts simple interest at 10% p.a. from the due date. Willful non-payment is a criminal offence under the Act, with penalties including imprisonment for the employer.

Are allowances like HRA and bonus included in the gratuity base?

No. The Act specifically includes only Basic Salary and Dearness Allowance (DA) in the gratuity base calculation. HRA, travel allowance, special allowance, incentives, and bonus are all excluded from the gratuity formula regardless of their magnitude.

Can I receive gratuity from multiple employers?

Yes. Each employer independently calculates and pays gratuity based on your service period and last drawn salary with that specific employer. If you worked 7 years at Company A and 6 years at Company B, both owe you separate gratuity amounts. The ₹20 lakh tax exemption limit applies individually per employer payment.