Gratuity Calculator
Estimate gratuity under the Payment of Gratuity Act, 1972 using your last drawn monthly basic salary plus DA and continuous service. Adjust Act coverage to switch between the 15 ÷ 26 and 15 ÷ 30 formulas.
Gratuity is computed on basic + DA, not on gross or CTC.
Part-year rule: if the final partial year exceeds six months (e.g. 6 months or more in the 0–11 month field), service is rounded up by one full year for this estimate.
Most private-sector establishments with applicable coverage use 15/26. Some employers not covered under the Act use 15/30 for gratuity-like benefits—confirm with your HR policy.
Estimated gratuity (capped at ₹20 lakh)
₹2,88,462
Rounded years of service
10
Monthly Basic + DA
₹50,000
Gratuity estimate
Gratuity (within ₹20 lakh cap)
₹2,88,462 • 100%
What is gratuity?
Gratuity is a lump-sum benefit paid by an employer to an employee in recognition of long service. In India it is governed by the Payment of Gratuity Act, 1972, which applies to establishments over prescribed employee thresholds. The amount depends mainly on last drawn wages (basic + dearness allowance) and length of continuous service. It is separate from PF or pension and is commonly accrued in salary structures as a percentage of basic.
Gratuity calculation formula
For employees covered under the Act, the widely used wage-based formula is:
- N — completed years of service after applying rounding for part-years (here: more than six months in the last partial year counts as an extra year).
- B — last drawn monthly basic salary + DA (and commission on sales where applicable as per law).
- 15 ÷ 26— fifteen days' wages for each year, with a month represented as 26 working days (standard under the Act).
If the establishment is not covered under the Act but pays a gratuity-like benefit, calculations sometimes use 15 ÷ 30 instead of 15 ÷ 26, which yields a lower amount for the same inputs. Always confirm with your employer which rule applies.
Maximum gratuity and ex-gratia
The Act provides that gratuity payable shall not exceed ₹20 lakh. Amounts your employer chooses to pay beyond this statutory gratuity may be treated as ex-gratia and may be governed by separate policy and tax treatment. This calculator shows the capped amount as your primary result and splits the chart when the uncapped formula exceeds ₹20 lakh.
Eligibility in brief
- Five-year rule: Continuous service of at least five years is generally required for payment on resignation, retirement, or similar—unless employment ends due to death or disability due to accident or disease, where different rules apply.
- Establishments: The Act applies to factories, mines, oil fields, plantations, ports, and shops or establishments with ten or more employees (subject to legal definitions and notifications).
- Nomination: Employees are expected to nominate family members for gratuity; on death, payment follows the nomination and applicable rules.
Taxation (overview)
Tax on gratuity depends on whether you are a government employee, whether your employer is covered under the Act, and limits under the Income-tax Act. For many private-sector employees covered under the Act, exemption is often computed as the least of prescribed statutory limits, actual gratuity received, and eligible gratuity as computed—subject to an overall lifetime cap on exempt gratuity as per law. Government employees' gratuity has specific exempt treatment. Use this page for planning only; consult a CA for filing and exemptions.
Why use this calculator?
- Quick estimate of gratuity from basic + DA and service length.
- Compare denominators (15/26 vs 15/30) to match your HR policy.
- See the ₹20 lakh cap and when an uncapped formula would exceed it.
- Free and private — runs in your browser; no sign-up.
Frequently asked questions
Is gratuity calculated on full salary or only basic?
Under the Act, the relevant wage is typically last drawn basic wages plus dearness allowance, plus commission where based on sales. It is not calculated on gross salary or CTC as a whole.
What is the difference between 15/26 and 15/30?
15/26 is the standard factor for employees covered under the Payment of Gratuity Act (26 working days in a month). 15/30 uses a calendar month of 30 days and is sometimes used when the employer is not covered under the Act but pays a similar benefit.
I resigned after 4.5 years. Am I eligible?
Generally, no—five years of continuous service is usually required. Exceptions exist for death or disablement due to accident or disease. Court decisions on borderline cases (e.g. 4 years 240 days) exist; verify with legal or HR advice.
How soon must gratuity be paid?
Regulations require employers to pay gratuity within prescribed timelines after it becomes payable, often within 30 daysof application in many cases; delayed payment may attract interest. Check current rules and your state's application.
Is this gratuity calculator accurate?
It applies standard formulas and rounding options described on this page. Actual gratuity can depend on payroll records, continuous service breaks, employer policy, and legal interpretations—use results as an estimate, not legal or tax advice.