Gratuity Calculator
About the Gratuity Calculator
Gratuity is a lump sum an employer pays you for long service, usually when you resign or retire. Under the Payment of Gratuity Act it becomes payable once you complete five years of continuous service with an employer.
This calculator uses the standard formula for employees covered by the Act: 15 days of your last drawn salary (basic + dearness allowance) for every completed year of service, with the result capped at ₹20 lakh.
Frequently asked questions
How is gratuity calculated?
For employees covered by the Payment of Gratuity Act: Gratuity = 15 × last drawn monthly salary (basic + DA) × years of service ÷ 26, where 26 is the assumed number of working days in a month. The amount is capped at ₹20 lakh.
How many years do I need to qualify for gratuity?
You generally need five years of continuous service with the same employer. The five-year condition is waived if service ends due to death or disablement.
How are part-years of service counted?
A year counts as completed if you worked more than six months in it; six months or less is ignored. So 6 years 7 months counts as 7 years, while 6 years 5 months counts as 6.
Is gratuity taxable?
For private employees covered by the Act, gratuity is tax-free up to ₹20 lakh over your lifetime; anything above that is taxed at your slab. Government employees' gratuity is fully exempt. (Limits as of 2026.)
Is gratuity based on basic salary or gross?
On "salary" as defined by the Act — basic pay plus dearness allowance — not your full gross or CTC. Allowances like HRA and bonuses are excluded.