How to use the Gratuity Calculator
- Enter your last monthly basic pay plus DA.
- Enter your years and months of service.
- Choose whether your employer is covered by the Gratuity Act.
About this tool
Under the Payment of Gratuity Act, 1972, gratuity = 15 × last drawn salary × years of service ÷ 26, where salary is the last monthly basic pay plus dearness allowance, 15 stands for 15 days’ wages per year and 26 is the number of working days in a month. A final part-year of more than 6 months counts as a full year; 6 months or less is ignored. For employers not covered by the Act, the usual formula is 15 ÷ 30 × salary × completed years.
Example: ₹50,000 basic + DA and 10 years 7 months of service → 11 years → 50,000 × 15 × 11 ÷ 26 = ₹3,17,308. Gratuity normally needs at least 5 years of continuous service (not needed on death or disability). For private-sector employees gratuity is tax-free up to ₹20 lakh in a lifetime; government employees’ gratuity is fully exempt. Rules for fixed-term staff may differ under the new labour codes — check with your employer.
Frequently asked questions
How is gratuity calculated for 10 years 7 months of service?
The 7 months is more than 6, so it counts as 11 years. With ₹50,000 basic + DA, gratuity = 50,000 × 15 × 11 ÷ 26 = ₹3,17,308.
Is gratuity paid before 5 years?
Normally no — 5 years of continuous service is required, except on death or disablement. Courts have counted 4 years and 240 days as 5 years in some cases.
How much gratuity is tax-free?
For non-government employees, up to ₹20 lakh over your career. Any amount above that is taxable as salary.
Why divide by 26 and not 30?
The Act treats a month as 26 working days, excluding 4 weekly offs, so 15 days’ wages = monthly salary × 15 ÷ 26.