Gratuity Calculator India
Calculate gratuity amount as per Payment of Gratuity Act 1972. Find your gratuity eligibility and payout.
About this calculator
Gratuity is a lump sum your employer pays you as thanks for long service, and it is one of the few retirement benefits that is tax-free up to a generous limit. The formula is fixed by law, so the payout depends on only three things: your last drawn salary, your years of service and whether your employer is covered by the Act.
This calculator gives the gratuity, the tax-free part and the taxable part. The labour codes in force since 21 November 2025 have widened the definition of wages and cut the eligibility period for fixed-term employees to one year, so it is worth confirming with HR how your own employer computes it.
How to use it
- Enter your Last Drawn Monthly Salary (basic plus DA).
- Enter your Years of Service.
- Choose Employment Type: covered or not covered under the Gratuity Act.
- Press Calculate Gratuity.
Gratuity formula
For employees covered by the Payment of Gratuity Act and its successor provisions: Gratuity = Last drawn salary × 15 ÷ 26 × Years of service, where salary is basic plus dearness allowance. The 26 stands for working days in a month. For employees not covered, the formula uses 30 days: Salary × 15 ÷ 30 × Years. A part year of more than six months is rounded up to a full year. The tax-free limit is ₹20 lakh.
Worked example
Basic ₹50,000 a month, 10 years of service, covered employee
| Gratuity (50,000 × 15 ÷ 26 × 10) | ₹2,88,462 |
| Tax-free limit | ₹20,00,000 |
| Taxable portion | ₹0 |
If the same employee is not covered by the Act, the formula uses 30 days and the gratuity is ₹2,50,000. Always check which rule your employer follows.
Tips and common mistakes
- Gratuity is payable after five years of continuous service, with exceptions for death or disability. Fixed-term employees under the labour codes now qualify after one year.
- The labour codes brought in a wider definition of wages from 21 November 2025, which can raise the base salary used for gratuity.
- The tax-free limit is ₹20 lakh across all employers. Anything above that is taxable as salary.
- Gratuity is calculated on your last drawn salary, so a raise in the final year lifts the payout.
- Check whether your employer pays gratuity on basic plus DA only, or on the wider wages definition now in force.
Frequently asked questions
How is gratuity calculated?
Last drawn salary × 15 ÷ 26 × years of service, where salary is basic plus dearness allowance.
After how many years is gratuity payable?
After five years of continuous service for permanent employees. Under the new labour codes, fixed-term employees become eligible after one year.
Is gratuity taxable?
Up to ₹20 lakh it is tax-free for employees covered by the Act. Above that, it is taxable as salary.
Are part years counted?
A period of more than six months is rounded up to the next full year.
What if my employer is not covered by the Act?
Gratuity is calculated on 15 days' salary per year using 30 days a month, and the tax-free limit is lower.
What is the maximum gratuity?
The tax-free ceiling is ₹20 lakh. The Act caps the statutory amount at the same limit.