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About the Gratuity Calculator
Gratuity is a lump sum your employer pays when you leave, as a reward for long service. It is a statutory right under the Payment of Gratuity Act 1972 for employees of establishments with ten or more workers, and it is one of the few payouts calculated by a fixed formula rather than by negotiation.
The formula
Gratuity = 15 × last drawn monthly salary × years of service ÷ 26
“Last drawn salary” means basic pay plus dearness allowance, not your gross or CTC. The 26 is the number of working days in a month the Act assumes, and the 15 represents fifteen days’ wages for every completed year. Establishments not covered by the Act often use a divisor of 30 instead, which produces a smaller figure — the tool has a switch for both.
A worked example
Ten years and seven months of service on a last drawn basic plus DA of ₹50,000:
| Input | Value |
|---|---|
| Last drawn salary (basic + DA) | ₹50,000 |
| Service | 10 years 7 months |
| Years counted (7 months rounds up) | 11 |
| Calculation | 15 × 50,000 × 11 ÷ 26 |
| Gratuity payable | ₹3,17,308 |
Change those seven months to five and the answer drops to ₹2,88,462, because only service beyond six months rounds up to another full year. Two months of timing is worth almost ₹29,000 here, which is worth knowing before you set a resignation date.
The chart
The bar chart plots what your gratuity would be at five, ten, fifteen, twenty, twenty-five and thirty years on your current salary, with your own position highlighted. Gratuity grows in a straight line with service until it meets the ₹20,00,000 ceiling, and the chart makes that flattening obvious — on a high salary you can reach the cap well before thirty years, after which additional service adds nothing to this particular benefit.
Eligibility and the ceiling
Gratuity generally becomes payable after five years of continuous service. That condition is waived if employment ends because of death or disablement, in which case it is payable regardless of tenure. The statutory maximum is ₹20,00,000, which is also the tax-exempt limit for private-sector employees — anything above it is taxable in your hands. Payment is due within 30 days of becoming payable.
What this does not cover
The calculator applies the standard statutory formula. Some employers pay more generously than the Act requires under their own policy, and government employees follow separate rules. Contract terms, notice-period disputes and unpaid periods can all affect what counts as continuous service. Source: Ministry of Labour & Employment. Treat the result as an estimate and check your settlement statement against it. For the rest of your exit maths, see the Salary Calculator.
Frequently Asked Questions
How is gratuity calculated?
Gratuity = 15 × last drawn monthly salary (basic + DA) × years of service ÷ 26. For establishments not covered by the Payment of Gratuity Act, the divisor is 30 instead of 26.
How much gratuity will I get for 10 years?
On a last drawn basic plus DA of ₹50,000, ten completed years gives 15 × 50,000 × 10 ÷ 26 = ₹2,88,462. Add seven or more extra months and it rounds to eleven years, raising it to ₹3,17,308.
Do I get gratuity before 5 years?
Normally no — five years of continuous service is the threshold. The exception is death or disablement, where gratuity is payable regardless of how long you served.
How does the rounding of service years work?
Only service beyond six months in the final year rounds up. Ten years and seven months counts as eleven; ten years and five months stays at ten.
Is gratuity taxable?
For private-sector employees, gratuity up to ₹20,00,000 is exempt from income tax, and the statutory maximum payable is the same figure. Amounts above that are taxable.
Is gratuity calculated on basic salary or gross?
On basic plus dearness allowance only — not on gross salary, CTC or allowances such as HRA. That is why the gratuity figure is far smaller than people expect from their total pay.