Gratuity Calculator

Work out the gratuity you are owed when you resign or retire after five years of continuous service.

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How to use the Gratuity Calculator

Enter your last drawn monthly basic salary plus dearness allowance.
Enter completed years and the extra months worked in the final year.
Choose whether your employer is covered by the Act (10+ employees).
Read the gratuity payable and how much of it is tax-free.

Formula used

Covered: Gratuity = 15 × last drawn (basic + DA) × years ÷ 26 — more than 6 months in the last year is rounded up to a full year.

Not covered: Gratuity = 15 × average salary × completed years ÷ 30.

Tax-free limit for private-sector employees: ₹20,00,000 (lifetime).

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Gratuity Calculator — FAQs

How many years of service are needed for gratuity?▾

Five years of continuous service, except on death or disablement where the five-year condition does not apply.

Why divide by 26?▾

The Act treats a month as 26 working days, so 15 days' wages equals 15/26 of monthly salary.

Is 7 years 7 months counted as 8 years?▾

Yes, for employers covered by the Act, any service over six months in the final year is rounded up to a full year.

Is gratuity taxable?▾

Gratuity up to ₹20 lakh is exempt for private-sector employees; anything above is taxed as salary. Government employees' gratuity is fully exempt.

Does gratuity form part of CTC?▾

Many employers show gratuity at 4.81% of basic in CTC. It is paid only when you leave after qualifying service, so it is not part of monthly in-hand pay.

How to use the Gratuity Calculator

Formula used

Gratuity Calculator — FAQs

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