Gratuity Calculator
Work out the gratuity your employer owes you under the Payment of Gratuity Act, 1972 — from your last drawn basic salary + DA and completed years of service.
Reviewed by the CalcCafe editorial team · Last updated 18 July 2026 · How we test our tools
Example
Suppose your last drawn basic salary plus dearness allowance is ₹60,000 a month and you have completed 10 years of service with a covered employer. The Act's formula gives 15 × 60,000 × 10 ÷ 26 = ₹3,46,154 (rounded). That is well below the statutory ceiling of ₹20,00,000, so no cap applies and the full amount is payable — and, being under the Section 10(10) limit, it is typically tax-free.
How it works
For establishments covered by the Payment of Gratuity Act, 1972, gratuity = 15 × last drawn monthly salary (basic + DA) × completed years of service ÷ 26. The 15 represents fifteen days' wages per year of service, and 26 is the number of working days assumed in a month, which is how a monthly salary converts to a daily wage. The statutory maximum is ₹20,00,000 — this tool shows the capped payout as the headline figure and the uncapped formula amount alongside it so you can see when the ceiling bites. Service of more than six months in the final year counts as a full year, so enter your rounded years (for example, 7 years 8 months → 8).
Good to know
Gratuity is a statutory retirement benefit under the Payment of Gratuity Act, 1972, payable by establishments with 10 or more employees when an employee leaves after at least five years of continuous service — whether by resignation, retirement or superannuation. The five-year condition is waived if employment ends due to death or disablement, in which case gratuity is paid to the employee or their nominee regardless of tenure.
The 15/26 fraction has a simple logic: the Act grants fifteen days' wages for every completed year of service, and a working month is taken as 26 days (30 or 31 calendar days minus weekly offs). Dividing monthly basic + DA by 26 gives the daily wage, and multiplying by 15 gives each year's entitlement. Only basic salary and dearness allowance count — HRA, bonuses and other allowances are excluded, which is why gratuity on a CTC of several lakhs can look smaller than expected.
Rounding matters at the edges: service beyond six months in the final year rounds up to the next full year, so 9 years 7 months counts as 10 years, while 9 years 5 months counts as 9. This calculator expects you to enter the already-rounded figure. Note that employees of establishments not covered by the Act often receive gratuity under a slightly different formula (15/30 instead of 15/26, using average salary), which produces a lower amount for the same inputs.
Tax treatment is favourable: for private-sector employees covered by the Act, gratuity is exempt under Section 10(10) of the Income-tax Act up to ₹20 lakh (aggregated across all employers over a lifetime); government employees' gratuity is fully exempt. The ₹20 lakh figure is also the statutory maximum an employer is obliged to pay under the Act — though nothing stops an employer from paying more ex gratia, and any amount above the exemption limit is taxed as salary income.
Frequently asked questions
Am I eligible for gratuity after 5 years?
Yes — five years of continuous service with a covered employer (an establishment with 10 or more employees) is the standard eligibility threshold, whether you resign or retire. The five-year requirement does not apply if employment ends due to death or disablement.
Why does the formula divide by 26?
The Act grants fifteen days' wages per completed year of service, and a month is treated as 26 working days for converting monthly salary to a daily wage. So gratuity = 15 × (monthly basic + DA) × years ÷ 26. Only basic salary and dearness allowance count — HRA and other allowances are excluded.
Is my salary data uploaded anywhere?
No — this calculator runs entirely in your browser. Your inputs never leave your device, and it works offline once the page has loaded.
Is this gratuity calculator free?
Yes, completely free with no sign-up and no limits.
People also ask
Is gratuity taxable in India?
For private-sector employees covered by the Payment of Gratuity Act, gratuity is exempt from income tax under Section 10(10) up to ₹20 lakh, aggregated over your lifetime across employers. Government employees' gratuity is fully exempt. Any amount above the limit is taxed as salary income.
How are partial years of service counted for gratuity?
Service of more than six months in the final year is rounded up to a full year — so 9 years 7 months counts as 10 years, while 9 years 5 months counts as 9. Enter the rounded figure in this calculator.
Can an employer pay more than ₹20 lakh gratuity?
Yes. The ₹20 lakh ceiling is the statutory maximum an employer must pay under the Act, but an employer can voluntarily pay a higher amount ex gratia. The portion above the Section 10(10) exemption limit is taxable in the employee's hands as salary.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.