Enter your last drawn basic salary plus DA and total years of service to instantly calculate your gratuity amount under the Payment of Gratuity Act, 1972.
Use your last drawn monthly basic salary plus Dearness Allowance. Do not include HRA or other allowances.
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Enter years of service
Enter the total number of completed years you have worked with the organisation.
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Get your result
The calculator instantly shows your estimated gratuity using the statutory formula: (n × b × 15) ÷ 26.
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Plan your finances
Use the result alongside EPF and PPF projections to plan your retirement or exit finances.
Why use this calculator?
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Planning retirement
Gratuity is a significant lump-sum payout at retirement. Knowing the amount helps you plan your post-retirement income alongside EPF and NPS.
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Evaluating a job change
Before resigning, check whether you have completed 5 years to qualify for gratuity. The calculator shows exactly what you would forfeit by leaving early.
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Verifying employer payment
If your employer has paid gratuity, use this calculator to verify the amount is correct and matches the statutory formula.
Gratuity formula — how it is calculated
Gratuity is one of the most underappreciated components of an employee's total compensation. Unlike EPF which is contributed monthly, gratuity is a one-time payment that grows with every additional year of service. An employee who stays for 10 years receives twice the gratuity of someone who leaves after 5 years, assuming the same salary.
The 5-year eligibility threshold is a critical planning point. Employees who are close to completing 5 years should factor this into any job change decision. Leaving even a few months before the 5-year mark means forfeiting the entire gratuity amount, which can be a significant sum depending on salary level.
Formula
Gratuity = (n × b × 15) ÷ 26
n = number of completed years of service. b = last drawn monthly basic salary + Dearness Allowance (DA). 15 = working days considered per year. 26 = working days in a month. Only basic salary and DA are used — HRA, bonuses, and other allowances are excluded. The maximum statutory gratuity is ₹20 lakh.
Worked example
An employee with 8 years of service and a last drawn basic + DA of ₹45,000/month: Gratuity = (8 × 45,000 × 15) ÷ 26 = 54,00,000 ÷ 26 = ₹2,07,692. If the same employee had served 8 years and 7 months, the service would be rounded up to 9 years, giving: (9 × 45,000 × 15) ÷ 26 = ₹2,33,654.
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for long and continuous service. It is governed by the Payment of Gratuity Act, 1972, which applies to all establishments with 10 or more employees. The amount is calculated based on the employee's last drawn basic salary plus Dearness Allowance (DA) and the total number of completed years of service.
Gratuity is typically paid at the time of retirement, resignation after qualifying service, or in the event of death or permanent disability. It is one of the key components of an employee's long-term financial benefit package in India.
Who is Eligible for Gratuity?
Under the Payment of Gratuity Act, 1972, an employee becomes eligible for gratuity when any of the following conditions are met:
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5 Years of Continuous Service
The most common eligibility condition. An employee must have completed at least 5 years of uninterrupted service with the same employer.
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Superannuation
An employee who retires upon reaching the age of superannuation as defined by the employer is eligible regardless of years served.
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Resignation After 5 Years
An employee who voluntarily resigns after completing 5 or more years of continuous service is entitled to receive gratuity.
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Disability or Death
If an employee suffers permanent disability due to an accident or illness, or passes away, gratuity is payable even before completing 5 years of service.
Important
The 5-year rule applies only to employees covered under the Payment of Gratuity Act. For employees not covered by the Act, gratuity may still be paid as a goodwill gesture at the employer's discretion.
Gratuity Calculation Formula
The standard formula used to calculate gratuity for employees covered under the Payment of Gratuity Act, 1972 is:
Formula
Gratuity = (n × b × 15) ÷ 26
n — years of service
b — last drawn basic salary + DA (monthly)
15/26 — 15 working days out of 26 working days per month
Worked Example
An employee with 5 years of service and a last drawn basic + DA of ₹30,000/month:
The maximum gratuity payable under the Act is ₹20 lakh (revised from ₹10 lakh). Any amount paid beyond this statutory ceiling is considered ex-gratia and is at the employer's discretion.
Rounding of Service Years
If an employee has served for a period that includes more than 6 months beyond a completed year, it is rounded up to the next full year. For example, 7 years and 7 months is treated as 8 years. Less than 6 months is rounded down.
Salary Component Used
Only the basic salary and Dearness Allowance (DA) are used in the gratuity formula. Other components such as HRA, special allowance, or bonuses are excluded from the calculation.
Tax Treatment
Gratuity received by government employees is fully exempt from income tax. For private sector employees, gratuity up to ₹20 lakh is tax-exempt. Any amount above this limit is taxable as per the applicable income tax slab.
Gratuity for Employees Not Covered by the Act
Employees working in organisations with fewer than 10 employees, or those not covered under the Payment of Gratuity Act, may still receive gratuity as a goodwill payment. In such cases, a different formula is commonly used:
Alternative Formula
Gratuity = (n × b × 15) ÷ 30
Here 30 is used instead of 26 (calendar days instead of working days). This typically results in a lower payout than the statutory formula.
How This Gratuity Calculator Helps You
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Know Your Exact Entitlement
Enter your basic + DA salary and years of service to instantly see the gratuity amount your employer is legally required to pay.
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Long-Term Financial Planning
Knowing your gratuity amount helps you plan retirement finances, especially when combined with EPF, PPF, and NPS projections.
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Saves Time
Manual calculation using the formula is error-prone. The calculator gives you an accurate result in seconds without any arithmetic.
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Use From Anywhere
Fully mobile-friendly and free. No signup, no downloads — just enter your details and get your result instantly.
Frequently Asked Questions
What is the minimum service period to receive gratuity?
Under the Payment of Gratuity Act, 1972, an employee must complete at least 5 years of continuous service to be eligible for gratuity. The exception is death or permanent disability, where gratuity is payable regardless of years served.
Is gratuity calculated on basic salary or CTC?
Gratuity is calculated only on the basic salary plus Dearness Allowance (DA). Other components of CTC such as HRA, bonuses, or special allowances are not included in the gratuity formula.
What is the maximum gratuity amount?
The statutory maximum gratuity under the Payment of Gratuity Act is ₹20 lakh. Any amount paid above this limit is called ex-gratia and is at the employer's discretion. It is also taxable beyond the exempt limit.
How are partial years of service counted?
If the remaining months after the last completed year are more than 6, the service is rounded up to the next full year. If 6 months or less, it is rounded down. For example, 8 years and 7 months counts as 9 years; 8 years and 4 months counts as 8 years.
Is gratuity taxable?
For government employees, gratuity is fully tax-exempt. For private sector employees, gratuity up to ₹20 lakh is exempt from income tax. Any amount above ₹20 lakh is added to income and taxed at the applicable slab rate.
Can I receive gratuity before completing 5 years?
Yes, in two specific cases: if the employee passes away (gratuity is paid to the nominee), or if the employee suffers permanent disability due to an accident or illness. In both cases, the 5-year minimum does not apply.