Gratuity Calculator

Gratuity is a thank-you payment from your employer for long service, paid when you resign, retire or are laid off. This gratuity calculator applies the standard formula — 15 days' wages for every year of service, with a month counted as 26 working days — including the rule that more than six months in your final year counts as a full year. It also shows how much is tax-free.

How to use it

Enter your last drawn basic salary plus dearness allowance (from your payslip).
Enter your completed years and any extra months of service.
Choose whether your employer is covered by the gratuity law (most companies with 10 or more employees are).

Formula

Gratuity = 15 × Last drawn wage × Years of service ÷ 26

Example

An employee with a basic + DA of ₹50,000 leaves after 10 years and 7 months. The 7 months count as a full year, so service = 11 years and gratuity = 15 × 50,000 × 11 ÷ 26 = ₹3,17,308— fully tax-free. Leaving after 10 years and 6 months would count only 10 years (₹2,88,462), so timing your exit can matter. See your full exit maths with the EPF calculator and theincome tax calculator.

Disclaimer: Results are estimates for educational purposes only and are not financial, investment or tax advice. Please verify with your bank, broker or a SEBI-registered adviser before acting. Read the full disclaimer.

Frequently asked questions

How is gratuity calculated?

For employers covered by the gratuity law: Gratuity = 15 × last drawn monthly wage × years of service ÷ 26, where wage means basic pay plus dearness allowance. A final part-year of more than six months counts as a full year. For employers not covered, it is half a month’s wage (÷ 30) for each completed year.

Who is eligible for gratuity?

Permanent employees usually need at least five years of continuous service; the condition is waived on death or disablement. Under the Code on Social Security, fixed-term employees become eligible after one year of service. Check your appointment terms and your employer’s policy.

Is gratuity taxable?

For private-sector employees, gratuity up to ₹20 lakh in a lifetime is tax-free; anything above is taxed as salary. Gratuity received by government employees is fully exempt.

Which salary is used — basic or gross?

The last drawn basic pay plus dearness allowance (and retaining allowance, if any), not your gross or in-hand salary. Under the new labour codes, if allowances exceed half of total pay, the excess is added back to “wages” — which can raise gratuity.

When must the employer pay it?

Within 30 days of the amount becoming payable. Delayed payment attracts simple interest at the rate notified by the government.