Gratuity Calculator
Find out the gratuity you are owed. Uses the (Basic + DA) × 15/26 × years formula, with the five-year eligibility rule and the ₹20 lakh statutory cap built in.
Calculate Your Gratuity
Basic pay + dearness allowance only — not gross or CTC.
Assumptions & sources
- Formula: (Basic + DA) × 15 × years ÷ 26 for employees covered by the Payment of Gratuity Act, 1972; ÷30 if not covered.
- Eligibility: 5 completed years of continuous service, waived only for death or disability; 1 year for fixed-term employees since the Labour Codes took effect on 21 November 2025.
- Wages = basic + DA; under the Code on Social Security, allowances above 50% of total pay count as wages too, so enter the higher figure if that applies to you.
- Last partial year rounds up to a full year if more than 6 months (Act-covered convention); the tool shows the years it used.
- Statutory cap: ₹20 lakh (private/PSU covered) or ₹25 lakh (central government). Government gratuity uses a different service-weighted formula not modelled here.
How gratuity is calculated
Under the Payment of Gratuity Act, 1972, you earn 15 days of wages for every completed year of service, dividing the monthly salary by 26 working days. Gratuity is based on wages — basic + DA (plus any allowances above 50% of your total pay, under the Labour Codes). You qualify after five years of continuous service (one year for fixed-term employees; no minimum on death or disability), and the payout is capped at ₹20 lakh (₹25 lakh for central-government employees).
Frequently Asked Questions
How is gratuity calculated?
For employees covered by the Payment of Gratuity Act, 1972, gratuity = (Last drawn Basic + DA) × 15 × years of service ÷ 26. The 15/26 means 15 days of wages for each completed year, taking 26 as the number of working days in a month. Gratuity is calculated on wages (basic + DA), not on your gross or CTC. Since the Labour Codes took effect on 21 November 2025, allowances above 50% of your total pay are added back to wages, so if your basic + DA is less than half your pay, the wage used for gratuity can be higher.
What is the 5-year rule for gratuity?
You become eligible for gratuity only after completing five years of continuous service with the same employer. The one exception is death or disablement — in those cases gratuity is payable regardless of how many years were served. If you leave before five years (and it is not death or disability), no gratuity is payable. Since 21 November 2025, fixed-term employees qualify after one year of continuous service; regular employees still need five.
Is the last partial year counted for gratuity?
For employers covered by the Act, if you have served more than six months beyond your last completed year, it is rounded up to a full year; six months or less is ignored. For example, 7 years 8 months counts as 8 years, while 7 years 4 months counts as 7 years. This tool applies that rounding and shows the number of years it used.
What is the maximum gratuity amount?
The maximum gratuity payable under the Payment of Gratuity Act is ₹20 lakh; anything the formula produces above that is capped. For central-government employees the payout ceiling is ₹25 lakh (from 1 January 2024). Gratuity up to ₹20 lakh is also exempt from income tax for private-sector employees.
Is gratuity taxable?
For private employees covered by the Act, gratuity up to ₹20 lakh is tax-free; any amount above that is taxable as salary. For government employees, the entire gratuity is tax-free — the ₹25 lakh figure is a cap on the payout, not a tax limit. Because the statutory cap and the tax-free limit are both ₹20 lakh for covered private employees, gratuity received within the cap is generally fully exempt.