Gratuity Calculator
Your gratuity amount from last drawn basic + DA and years of service, with the tax-free part.
- Free
- No sign-up
- Runs in your browser
Most employers with 10 or more employees are covered. Not sure? Choose “Covered”.
Your gratuity
₹3,17,308
15/26 × ₹50,000 × 11 years (10 years 7 months rounded up)
- Tax-free₹3,17,308 (100%)
- Taxable₹0 (0%)
- Years counted
- 11
- Per year of service
- ₹28,846
- Tax-free part
- ₹3,17,308
- Taxable part
- ₹0
All of it is within the ₹20,00,000 tax-free limit for non-government employees (₹3.17 Lakh).
Gratuity at different lengths of service
| Service | Gratuity | Taxable |
|---|---|---|
| 5 years | ₹1,44,231₹1.44L | ₹0₹0 |
| 10 years | ₹2,88,462₹2.88L | ₹0₹0 |
| 15 years | ₹4,32,692₹4.33L | ₹0₹0 |
| 20 years | ₹5,76,923₹5.77L | ₹0₹0 |
| 25 years | ₹7,21,154₹7.21L | ₹0₹0 |
| 30 years | ₹8,65,385₹8.65L | ₹0₹0 |
At your current basic + DA of ₹50,000 a month.
How gratuity is calculated in India
If your employer is covered by the Payment of Gratuity Act, 1972, gratuity is 15/26 × last drawn basic + DA × years of service. The 15/26 means 15 days’ wages for every year, with a month taken as 26 working days. A final part-year of more than six months counts as a full year, so 10 years and 7 months is treated as 11 years, while 10 years and 6 months stays at 10.
If your employer is not covered, the usual formula is 15/30 × average basic + DA of the last 10 months × completed years, and part-years are ignored. This is also the formula the Income Tax Act uses for the tax-free limit of such employees.
Example: with a last drawn basic + DA of ₹50,000 and 10 years 7 months of service, a covered employee gets 15/26 × ₹50,000 × 11 = ₹3,17,308. With exactly 10 years 6 months it is ₹2,88,462. A non-covered employee with the same salary and service gets 15/30 × ₹50,000 × 10 = ₹2,50,000.
Is gratuity taxable?
For government employees it is fully tax-free. For everyone else, the tax-free part is the lowest of the gratuity actually received, the formula amount above and a fixed ceiling — ₹20 lakh at the time of writing. Anything above that is taxed as salary in the year you receive it. The ceiling is set by the government and has been raised before, so it is an editable input here; check the current limit before you file your return.
Who is eligible for gratuity?
Under the Act you need at least five years of continuous service with the same employer, except on death or disablement, when gratuity is paid regardless of service. India’s new labour codes change some eligibility rules (for example for fixed-term employees) and the definition of wages, so confirm with your employer or the official notification which rules apply to you.
Frequently asked questions
- Which salary is used for gratuity?
- Only basic pay plus dearness allowance (DA). HRA, special allowance, bonus and other perks are not included, which is why gratuity is often lower than people expect.
- Why does the formula use 26 days instead of 30?
- The Act treats a month as 26 working days (excluding four weekly offs). Dividing by 26 gives a higher daily wage than dividing by 30, so covered employees receive more.
- Is there a maximum gratuity?
- The amount payable under the Act is capped at the same ceiling as the tax-free limit (₹20 lakh at the time of writing). An employer can pay more under its own policy, but the extra is taxable.
- How long does the employer have to pay?
- Under the Act, gratuity should be paid within 30 days of it becoming payable; delayed payments attract simple interest.