Gratuity Calculator
Gratuity is the lump sum most employees know exists but few can compute: a statutory thank-you for long service, paid on exit once you have served five years. The formula itself is short — fifteen days of wages for every year of service — but the 26-day divisor, the five-year floor and the ₹20 lakh ceiling all decide what finally lands. This calculator applies the Act exactly, including when the answer is nothing.
Enter values
Results
- Gratuity payable
- ₹2,30,769.23
- Eligibility
- Payable — 8 years served (5 required)
- Each year adds (15 days' wages)
- ₹28,846.15
How is the Gratuity calculated?
Enter the last drawn monthly basic plus dearness allowance, which is the wage the formula runs on, and your completed years of service — decimals are fine for part-years. The page returns the gratuity amount, an eligibility line that spells out your position against the five-year rule, and the value of one year's accrual so you can see how the figure grows.
Formula
Gratuity = (last drawn monthly basic + DA) × 15 ÷ 26 × years of service, capped at ₹20,00,000. ÷ 26 values a month as 26 working days per the Payment of Gratuity Act 1972; × 15 grants fifteen days of those wages yearly. Nothing is payable before five years of continuous service, except in the death or permanent-disablement cases the Act carves out.
Example
Last drawn basic plus DA of ₹50,000 after eight years: 50,000 × 15 ÷ 26 = ₹28,846.15 of accrual per year, × 8 = ₹2,30,769.23 payable on exit. At the five-year floor the same wage pays ₹1,44,230.77, while four years and eleven months pays nothing at all. A very large wage accumulates past the ceiling quickly — any computation above ₹20,00,000 is paid as ₹20,00,000.
Things to remember
Gratuity is a right, not a favour, so check the settlement statement line by line before signing anything. The figure assumes the wages and service your letter states, and disputes over break-in-service or unpaid dues are worth documenting. Cross-check your EPF corpus while reconciling exit dues.
Frequently Asked Questions
When am I eligible for gratuity in India?
After five years of continuous service with the same employer, under the Payment of Gratuity Act 1972. Two exceptions pay sooner: death or permanent disablement, where gratuity becomes payable regardless of the five-year rule.
How is gratuity calculated from basic salary?
Multiply last drawn monthly basic plus DA by 15, divide by 26, then multiply by years of service. On ₹50,000 and 8 years: 50,000 × 15 ÷ 26 × 8 = ₹2,30,769.23, subject to the ₹20 lakh ceiling.
Is gratuity taxable after five years?
Gratuity received by most private-sector employees with five years of service is exempt up to ₹20,00,000. Government employees get the full amount tax-free, and anything above ₹20 lakh for everyone else is taxable salary income.
What if I resign before completing five years?
Resignation before five years generally earns no gratuity — the eligibility floor is strict. Leaving in the sixth year can count the part year if it crosses six completed months, and death or disablement cases are payable irrespective of service length.
Related Calculators
- EPF CalculatorSalary & CareerSplit employee and employer EPF contributions, the 8.33% pension share, and project the corpus at 8.25% over your tenure.
- Severance Pay CalculatorSalary & CareerAdd notice pay, statutory gratuity and agreed severance months into one separation package with a clear breakdown.
- Income Tax CalculatorIndian TaxEstimate your FY 2025-26 income tax in either regime, with slab-wise tax, the 87A rebate, cess and the rate you pay.
- Financial Independence CalculatorFinance & InterestFind the corpus financial independence needs, what current savings grow to by retirement, and the shortfall.