Gratuity Calculator

Calculate the gratuity you are entitled to under the Payment of Gratuity Act, 1972. Enter your last drawn salary and years of service to see your lump-sum payout, with the ₹20 lakh cap and eligibility rules built in.

With a last drawn salary of ₹50,000 and 10 years of service, your payable gratuity is about ₹2.88 L under the 15/26 formula.

₹
₹5K ₹10L
Yr
1 45

How gratuity is calculated

Under the Payment of Gratuity Act, 1972, gratuity equals (15 / 26) × last drawn monthly salary × completed years of service. The 15/26 factor represents 15 days of wages for every year worked, with a month treated as 26 working days. Your last drawn salary is your basic pay plus dearness allowance. A final year exceeding 6 months rounds up to a full year.

The ₹20 lakh cap and the 5-year rule

Two statutory limits shape your payout. First, eligibility: you must complete 5 years of continuous service, except where service ends due to death or disablement, in which case the minimum is waived. Second, the ceiling: the maximum statutory gratuity is ₹20 lakh — anything the formula computes above this is not payable as statutory gratuity.

Tax treatment

  • Government employees: gratuity is fully exempt from income tax.
  • Covered private employees: exempt up to the least of ₹20 lakh, actual gratuity, or the 15/26 formula amount.
  • Any excess over the exempt limit is taxed as part of your salary income.
  • Gratuity is paid in addition to other retirement benefits such as EPF and pension.

Frequently asked questions

What is gratuity and who is eligible?
Gratuity is a lump-sum reward paid by an employer for long service, governed by the Payment of Gratuity Act, 1972. It applies to establishments with 10 or more employees. You become eligible after completing 5 continuous years of service, payable on resignation, retirement, or superannuation. The 5-year rule is waived in case of death or disablement.
How is gratuity calculated?
For employees covered under the Act, gratuity = (15 / 26) × last drawn monthly salary × number of completed years of service. The 15/26 reflects 15 days of wages for each year, treating a month as 26 working days. Last drawn salary means basic salary plus dearness allowance. A service period over 6 months in the final year is rounded up to a full year.
Is there a maximum gratuity limit?
Yes. The maximum gratuity payable under the Act is capped at ₹20 lakh. Any amount calculated above this ceiling is not payable as statutory gratuity (though an employer may pay more on an ex-gratia basis). This calculator applies the ₹20 lakh cap automatically.
Is gratuity taxable?
For private-sector employees covered under the Act, gratuity is tax-exempt up to the least of ₹20 lakh, the actual gratuity received, or the amount computed by the 15/26 formula. Government employees enjoy full exemption. Any gratuity above the exempt limit is taxed as salary income.
What does “completed years of service” mean?
Only fully completed years count, with one rounding rule: if you serve more than 6 months beyond a completed year, it rounds up to the next full year; 6 months or less is ignored. For example, 10 years and 7 months counts as 11 years, while 10 years and 4 months counts as 10 years.
Can I get gratuity before completing 5 years?
Normally no — 5 years of continuous service is the minimum to qualify. The one major exception is death or disablement due to accident or illness, where gratuity is paid regardless of how long the employee served. Courts have also held that 4 years and 240 days in the fifth year can count as 5 completed years, so being just short of a full year may still make you eligible.
How is gratuity calculated for employees not covered by the Act?
For employees whose establishment is outside the Payment of Gratuity Act, the formula is (15 / 30) × average last 10 months’ salary × completed years of service — using 30 days a month and treating only full completed years, with no rounding up for part-years. Covered employees use the more favourable 15/26 basis instead. In both cases salary means basic plus dearness allowance.
How is gratuity paid on the death of an employee?
On death, the 5-year minimum service condition is waived and gratuity is paid to the nominee or legal heir based on the years actually served. Many employer-run schemes also offer enhanced gratuity on death covering the years that would have been served up to retirement. Gratuity received by the nominee or heirs on the employee’s death is exempt from income tax.
When must an employer pay gratuity?
The employer must pay gratuity within 30 days of it becoming due — typically from the date of resignation, retirement, or death. If payment is delayed beyond 30 days, the employer is liable to pay simple interest on the amount. An employer can forfeit gratuity only in limited cases, such as termination for proven misconduct involving moral turpitude or damage to company property.

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The results shown are estimates for illustration only, based on the inputs and assumptions you provide. Actual returns, interest, and tax depend on market conditions, prevailing rates, and applicable laws, which change over time. This is not investment, tax, or financial advice — please consult a qualified advisor before making decisions.

Gratuity payable
₹2,88,462
Years of service
10 Yr