Calculate the gratuity amount payable to an employee under the Payment of Gratuity Act, based on the last drawn salary and years of continuous service.
How to Use the Gratuity Calculator
Enter your "Last Drawn Monthly Salary (Basic + DA)".
Enter your total "Years of Service", including decimals (e.g. 7.5 for 7 years 6 months).
Click "Calculate Gratuity" to see the years considered and the gratuity amount payable.
The Gratuity Formula Explained
Gratuity = 15 × Last Drawn Salary × Years of Service ÷ 26. Here, salary means your monthly basic pay plus dearness allowance. HRA, bonus, overtime, and most other allowances are left out.
The numbers come from the law itself. For every year of service, you are entitled to 15 days' wages. A month is treated as 26 working days, since four Sundays are excluded, so one day's wage is monthly salary ÷ 26. Put together, each year of service earns you about 0.577 of a month's Basic + DA, or a little over half a month's salary.
Partial years: under the Payment of Gratuity Act, the final part year counts as a full year only if it is more than six months. So 9 years 7 months is treated as 10 years, while 9 years 6 months and 9 years 5 months are both treated as 9 years. The calculator applies this rule to the decimal you enter.
Worked Example
Priya's last drawn Basic + DA is ₹50,000 a month and she resigns after 12 years and 8 months. The 8 extra months are more than six, so her service counts as 13 years. Gratuity = 15 × 50,000 × 13 ÷ 26 = ₹3,75,000. Had she left after 12 years and 4 months, the service would count as 12 years and the amount would be ₹3,46,154, about ₹29,000 less. If you are close to a cut-off, a few weeks of extra service can make a real difference.
Gratuity on a last drawn Basic + DA of ₹50,000:
Years of Service
Gratuity
5
₹1,44,231
10
₹2,88,462
15
₹4,32,692
20
₹5,76,923
25
₹7,21,154
30
₹8,65,385
Eligibility, Limits and Tax
Eligibility: The Act applies to establishments with 10 or more employees. Gratuity is generally payable after 5 years of continuous service when you resign, retire or are laid off. The 5-year condition does not apply on death or disablement, where it is paid to you or your nominee.
Labour codes: The Code on Social Security, 2020, brought into force in November 2025, consolidates the gratuity law and allows fixed-term employees to receive gratuity after one year of service. It also requires that allowances excluded from wages do not exceed half of total pay, which can raise the salary figure used for gratuity. Check your employer's HR policy and the Ministry of Labour notifications for how this applies to you.
Maximum amount: The statutory ceiling for private-sector employees is ₹20 lakh. Employers can pay more under their own policy, but the excess is not covered by the Act.
Income tax: Gratuity received by government employees is fully exempt. For others, the exemption is the lowest of the actual gratuity, the formula amount and ₹20 lakh, and the ₹20 lakh limit applies across your whole career, not per employer. Any excess is taxed as salary.
Payment timeline: The employer must pay gratuity within 30 days of it becoming payable. Delays attract simple interest at a rate notified by the government.
Gratuity and tax rules change from time to time. Treat this as general guidance and confirm your entitlement with your employer, the Ministry of Labour or a tax adviser.
Frequently Asked Questions
It uses the standard formula under the Payment of Gratuity Act: Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26, where 26 represents the average number of working days in a month.
A part year counts as a full year only if it is more than six months. For example, 7 years and 7 months (7.58) is treated as 8 years, but 7 years and 6 months (7.5) is treated as 7 years. This follows the wording of the Payment of Gratuity Act, which counts a part year "in excess of six months".
For employees covered under the Payment of Gratuity Act, the tax-exempt gratuity amount is currently capped at ₹20,00,000 by statute. This calculator shows the uncapped computed amount so you can see the raw formula result; check current limits and your employer's policy for the actual payable/exempt amount.
Under the Code on Social Security, 2020, which came into force in November 2025, fixed-term employees become eligible for gratuity on a pro-rata basis after one year of service instead of five. Contract workers hired through a contractor are generally entitled to gratuity from the contractor. Confirm with your employer how the new rules apply to your contract.
An employer outside the Act is not legally required to pay gratuity, but many do under their own policy. For income tax purposes, the exempt amount for such employees is worked out as half a month's average salary for each completed year, using the average of the last 10 months' salary. Part years are ignored in that calculation, so the exempt amount is usually lower than this calculator's result.