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Gratuity Calculator

Enter your last drawn basic salary and length of service to calculate your gratuity under the Payment of Gratuity Act, 1972, including how much of it is tax-free.

Last updated

₹50K · Gratuity is calculated on basic plus dearness allowance, not on gross salary or CTC.

Six months or more rounds up to a full year for covered employers.

Is your employer covered by the Payment of Gratuity Act?

The Act applies to establishments with ten or more employees on any day in the preceding twelve months.

The result updates as you type. Nothing you enter is saved, sent to a server or shared.

Gratuity payable

₹2,88,462

10 years of service counted

Years counted
10
Gratuity amount
₹2,88,462
Tax-exempt portionSection 10(10) ceiling is ₹20,00,000.
₹2,88,462

Formula applied

(15 × last drawn monthly salary × completed years of service) ÷ 26

How this calculator works

Gratuity is a statutory lump sum an employer owes you for long service. Under the Payment of Gratuity Act, 1972, it becomes payable once you complete five years of continuous service with the same employer, and it is paid when you leave — on resignation, retirement, superannuation, or to your nominee on death.

The formula pays fifteen days of wages for every completed year of service. The divisor is 26, not 30, because the Act treats a month as twenty-six working days. That choice quietly makes the benefit about 15% larger than a thirty-day month would.

Part-years are rounded generously but only in one direction. Six months or more in your final year counts as a full year; less than six months does not count at all. So leaving after 10 years and 7 months pays for 11 years, while leaving after 10 years and 5 months pays for 10.

The five-year condition has one important exception: it is waived entirely if service ends because of death or disablement. In that case gratuity is payable regardless of how long the employee had worked.

The formula

Employers covered by the Act

Gratuity = (15 × last drawn monthly basic + DA × completed years) ÷ 26

15
Fifteen days of wages for each completed year of service
26
Working days in a month, as the Act defines it
years
Completed years, with six months or more rounding up

Employers not covered by the Act

Gratuity = (15 × average monthly salary of the last 10 months × completed years) ÷ 30

A thirty-day month is used and part-years are not rounded up, so the same service produces a smaller payment. Employers outside the Act may still pay more voluntarily under their own policy.

Worked example: ₹50,000 basic, 10 years and 7 months

Sunita resigns after 10 years and 7 months with a company covered by the Act. Her last drawn basic plus DA is ₹50,000 a month.

Step-by-step calculation for the worked example
Last drawn basic + DA₹50,000
Actual service10 years 7 months
Years counted (7 months rounds up)11
15 × ₹50,000 × 11₹82,50,000
Divided by 26₹3,17,308
Tax-exempt (below the ₹20 lakh ceiling)₹3,17,308
Taxable₹0

Sunita receives ₹3,17,308, entirely tax-free. Had she left two months earlier, at 10 years and 5 months, only 10 years would have counted and she would have received ₹2,88,462 — roughly ₹29,000 less for two months of work.

Things worth knowing

  • Gratuity is calculated on basic plus dearness allowance only. HRA, bonus, overtime and other allowances are excluded, so it is usually far smaller than a CTC-based guess.
  • The tax exemption under section 10(10) is capped at ₹20,00,000 for non-government employees, and that ceiling applies across your whole working life, not per employer.
  • The gratuity provision inside your CTC is an accounting entry, not a guarantee. If you leave before completing five years, you receive nothing — the money simply stays with the employer.
  • An employer must pay gratuity within thirty days of it becoming payable. Delay attracts simple interest, and unpaid gratuity can be pursued with the Controlling Authority under the Act.
  • Gratuity can be forfeited wholly or partly where services are terminated for specified acts of wilful omission, riotous conduct or an offence involving moral turpitude. This is narrow and must be justified by the employer.
  • Nominate someone using Form F. Without a nomination, payment to your family after death becomes considerably slower.

Frequently asked questions

Do I get gratuity if I leave before five years?
Generally no. Five years of continuous service is the qualifying condition. The exception is when service ends because of death or disablement, where the requirement is waived entirely. Some employers pay a voluntary equivalent under their own policy, but they are not obliged to.
Does 4 years and 240 days count as five years?
This is genuinely contested. Some High Courts have held that 240 days of work in the fifth year amounts to a completed year of continuous service, and several employers follow that reading. It is not settled uniformly across the country. If you are close to the line, ask your employer to confirm their policy in writing before resigning.
Is gratuity taxable?
For non-government employees, gratuity is exempt under section 10(10) up to a lifetime ceiling of ₹20 lakh; anything above that is taxable as salary. Government employees receive full exemption. The ceiling applies cumulatively across all employers, not to each payment separately.
Is gratuity calculated on CTC or on basic salary?
On last drawn basic plus dearness allowance. Because basic is typically only 40–50% of CTC, gratuity works out to considerably less than people expect when they assume it is based on total salary.
What if my employer refuses to pay?
Send a written claim in Form I first. If it is not paid within thirty days, you can apply to the Controlling Authority appointed under the Act, which can order payment with interest. Keep your appointment letter, salary slips and relieving letter — they establish both service and last drawn wages.

Sources

Every figure on this page is traceable to the official source below. If a source has changed since the date shown, please tell us and we will correct it.