01
Enter your salary and service
Type your last-drawn monthly Basic + DA, the completed years of service, and any extra months. The calculator updates instantly.
Gratuity Calculator
Calculate gratuity under the Payment of Gratuity Act — and your tax-free amount.
Updated Reviewed by Sajid Hussain· Editor
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Results update in real time as you type — no submit needed.
Your numbers
Gratuity bills sellers in Indian Rupee (INR), so this calculator works in INR — not your selected US Dollar ($). Every figure below matches your real Gratuity statement. Localised USD marketplaces are coming soon.
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Last updated
June 10, 2026
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India HR Tool
What Is a Gratuity Calculator?
A gratuity calculator works out the lump sum your employer pays you for long service in India — applying the Payment of Gratuity Act formula to your last-drawn salary and years of service, then showing how much of it is tax-free.
Gratuity is a reward for staying with one employer for the long term. After 5 years of continuous service, you are entitled to a payout when you resign, retire, or are let go. This calculator turns your salary and tenure into the exact rupee figure — and, unlike most calculators, it also tells you how much is taxable.
**The formula depends on whether your employer is covered by the Act.** Employers with 10 or more employees are covered and use 15 days’ salary per year on a 26-day month (15/26). Smaller employers use a 30-day month (15/30), which works out about 13% lower. This calculator applies the right one based on your selection.
**Only Basic salary and DA count.** Gratuity ignores HRA, bonus, and other allowances. Using your full gross salary by mistake is the single most common error — it inflates the result by a wide margin. Enter Basic + DA and the number is correct.
**Eligibility has real nuance.** The headline rule is 5 years for permanent staff, but death or disablement waives it, and 4 years plus 240 days can count as the full fifth year. Fixed-term and contract employees now vest pro-rata after just 1 year under the Code on Social Security, 2020 (effective 21 November 2025). This tool flags your eligibility status so you know whether the payout is actually due.
**Tax treatment is where most calculators stop short.** Government gratuity is fully tax-free. Private gratuity is exempt only up to a ₹20 lakh lifetime limit under Section 10(10) — and that limit is shared across every employer you have ever had. This calculator splits your gratuity into the tax-free and taxable parts so there are no surprises.
Quick facts
- Governing law
- Payment of Gratuity Act, 1972
- Formula
- 15/26 (covered) · 15/30 (non-covered)
- Salary basis
- Basic + DA only
- Eligibility
- 5 years (waived on death)
- Tax-free limit
- ₹20 lakh lifetime (private)
- Free to use
- No sign-up needed
How It Works
Calculate Your Gratuity in Four Steps
02
Pick employer coverage and employee type
Choose whether your employer is covered by the Act (10+ employees → 15/26) or not (15/30), and whether you are a private or government employee — this drives both the amount and the tax.
03
Check eligibility
See whether you meet the 5-year requirement. Use the advanced section to flag a death/disablement exit, which waives the 5-year rule.
04
Read your gratuity and tax-free amount
Get the total gratuity, the years counted after rounding, and the split between the tax-free and taxable portions under Section 10(10).
Steps to use the Gratuity Calculator: Enter your salary and service, Pick employer coverage and employee type, Check eligibility, Read your gratuity and tax-free amount.
The Formula
How Gratuity Is Calculated in India
01
Covered employer (under the Act)
Gratuity = (15 × Last-Drawn Salary × Years) ÷ 26
Salary is Basic + DA. 15 is the days of wages per completed year; 26 is the working days in a month. A part-year over 6 months rounds the years up by one.
Example: ₹60,000 × 15 × 10 ÷ 26 = ₹3,46,154 for 10 years of service
02
Non-covered employer
Gratuity = (15 × Average Salary × Completed Years) ÷ 30
Salary is the average Basic + DA of the last 10 months. The 30-day month makes this about 13% lower than the covered formula, and only fully completed years count — extra months are ignored.
Example: ₹60,000 × 15 × 10 ÷ 30 = ₹3,00,000 for 10 years of service
03
Tax-free amount (Section 10(10))
Tax-Free = min(Gratuity, ₹20,00,000 − Prior Exempt)
Government gratuity is fully exempt. For private employees, the exemption is the least of the actual gratuity, the formula amount, and the ₹20 lakh lifetime cap (reduced by any gratuity exemption already used). Anything above is taxable.
Example: Gratuity ₹3,46,154 is below ₹20 lakh → fully tax-free → taxable ₹0
Worked Example
Step-by-Step Walkthrough (₹60,000 salary, 10 years, covered)
Currency note: the example below uses a benchmark scenario priced in Indian Rupee (INR). Values are converted to US Dollar (USD) at the latest exchange rate so you can compare against your own numbers.
Scenario
A private-sector employee with a covered employer, last-drawn Basic + DA of $60,000.00, resigning after exactly 10 years of service.
1
Step 1 · Salary basis
Gratuity uses Basic + DA only. The last-drawn figure here is $60,000.00 per month.
Salary basis = $60,000.00
2
Step 2 · Years counted
10 completed years, with no part-year over 6 months, so the years counted stay at 10.
Years counted = 10
3
Step 3 · Apply the 15/26 formula
Covered employer: $60,000.00 × 15 × 10 ÷ 26 = $346,154.00.
Gratuity = $346,154.00
4
Step 4 · Tax check
$346,154.00 is well below the 20 lakh lifetime exemption, so the whole amount is tax-free.
Tax-free = $346,154.00 · Taxable = $0.00
The takeaway
After 10 years at $60,000.00, a covered employer pays $346,154.00 in gratuity — entirely tax-free, since it is far below the 20 lakh Section 10(10) limit. Staying long enough to cross each year boundary (and the 6-month rounding mark) is the simplest way to grow this payout.
Gratuity by tenure
Gratuity by Years of Service (Covered Employer, 15/26)
| Metric | Poor | Average | Good | Excellent |
|---|---|---|---|---|
₹40,000 salary (Basic+DA) Payment of Gratuity Act, 1972 (s.4) | 5 yrs: ₹1.15L | 10 yrs: ₹2.31L | 20 yrs: ₹4.62L | 30 yrs: ₹6.92L |
₹75,000 salary Payment of Gratuity Act, 1972 (s.4) | 5 yrs: ₹2.16L | 10 yrs: ₹4.33L | 20 yrs: ₹8.65L | 30 yrs: ₹12.98L |
₹1,00,000 salary Payment of Gratuity Act, 1972 (s.4) | 5 yrs: ₹2.88L | 10 yrs: ₹5.77L | 20 yrs: ₹11.54L | 30 yrs: ₹17.31L |
₹1,50,000 salary Payment of Gratuity Act, 1972 — *over ₹20L cap is taxable | 5 yrs: ₹4.33L | 10 yrs: ₹8.65L | 20 yrs: ₹17.31L | 30 yrs: ₹25.96L* |
Comparison
Calcrux vs ClearTax vs Groww
| Feature | Calcrux (Free) | ClearTax | Groww |
|---|---|---|---|
| Gratuity amount (15/26 formula) | |||
| Non-covered employer (15/30) option | |||
| 5-year + 4yr-240day eligibility check | |||
| Tax-free vs taxable breakdown (Sec 10(10)) | |||
| ₹20 lakh lifetime cap with prior offset | |||
| Smart insights & worked example | |||
| Free, no sign-up required |
Common Mistakes
Gratuity Mistakes That Cost You
Using gross salary instead of Basic + DA
Why it matters
Gratuity counts only Basic + DA, but people often plug in their full gross or CTC. Since Basic is usually 40–50% of gross, this can overstate the gratuity by more than double.
Fix
Enter only Basic + DA from your payslip. This calculator’s salary field is labelled accordingly so you use the right figure.
Assuming you get nothing before 5 years
Why it matters
The 5-year rule has real exceptions. Death or disablement waives it entirely, and 4 years plus 240 days can count as the fifth year — so some employees who think they are not eligible actually are.
Fix
Check the eligibility status this tool shows, and use the death/disablement toggle. If you are near 4 years 8 months, the 240-day rule may apply.
Forgetting that gratuity above ₹20 lakh is taxable
Why it matters
Private-sector gratuity is tax-free only up to ₹20 lakh. High earners with long tenure can cross this, and the excess is taxed as salary — a surprise at filing time.
Fix
The tool splits your gratuity into tax-free and taxable parts. If the taxable amount is non-zero, plan for the slab-rate tax on the excess.
Using 15/26 for a non-covered employer
Why it matters
Employers with fewer than 10 employees are not covered by the Act and use the 15/30 formula, which is about 13% lower. Using 15/26 overstates the payout.
Fix
Set employer coverage correctly. If your employer has under 10 staff, choose “Not covered” and the tool applies 15/30.
Ignoring the part-year rounding rule
Why it matters
For covered employers, more than 6 months in the final year rounds up to a full year — worth a whole extra year of gratuity. People who quit at, say, 7 years 7 months but count only 7 years short-change themselves.
Fix
Enter the additional months. The tool rounds 7+ months up for covered employers and shows the “years counted”.
Overlooking the ₹20 lakh LIFETIME cap
Why it matters
The exemption is cumulative across all employers, not per job. Someone who already used part of it earlier has less headroom, making more of the new gratuity taxable than they expect.
Fix
Enter any tax-free gratuity claimed before in the advanced section — the tool reduces your remaining exemption accordingly.
Pro Tips
Make the Most of Your Gratuity
Use Basic + DA only
Always calculate on Basic + DA, never gross or CTC. A higher Basic component in your salary structure directly increases your gratuity.
Keep Basic at 50%+
Under the 2026 wage code, Basic + DA must be at least 50% of total pay. If yours is lower, your employer must treat the excess allowances as wages — which raises your gratuity base.
Cross the 6-month mark
If you are with a covered employer and close to a 6-month boundary in your final year, staying a little longer rounds up a whole extra year of gratuity.
Mind the lifetime cap
Track tax-free gratuity from past jobs. Once you have used the ₹20 lakh exemption across employers, further gratuity is fully taxable.
Cross a full 5 years
If you are near 4 years 8 months, the 4yr-240day rule may make you eligible. Crossing a clean 5 years removes any doubt about entitlement.
Government gratuity is fully tax-free
If you are a government employee, your entire gratuity is exempt with no cap — the ₹20 lakh limit applies only to the private sector.
Who Uses This
Who Uses This Gratuity Calculator
The Gratuity Calculator works across every stage of the workflow.
Employees resigning or retiring
Someone leaving after 8 years wants to know their exact gratuity and how much will land in their account after tax. They enter Basic + DA and tenure and read the tax-free amount.
HR and payroll teams
An HR executive computing a full-and-final settlement needs the correct gratuity for a covered employer, including the part-year rounding, to put the right figure on the settlement sheet.
Employees near the 5-year mark
A professional at 4 years 9 months is deciding whether to stay. The eligibility check shows whether the 4yr-240day rule applies and what staying to a clean 5 years is worth.
High earners checking tax
A senior manager with 25 years of service crosses the ₹20 lakh tax-free limit. They use the tool to see the taxable portion and plan for the slab-rate tax on the excess.
Families on a death claim
A nominee needs to estimate the gratuity payable after an employee’s death in service, where the 5-year rule is waived. They toggle death/disablement to compute the amount.
Glossary
Key Gratuity Terms Explained
Every important term you'll encounter in this calculator and the broader topic.
- Gratuity
- A lump-sum payment an employer makes to an employee for long and continuous service, payable on resignation, retirement, death, or disablement under the Payment of Gratuity Act, 1972.
- Payment of Gratuity Act, 1972
- The Indian law that makes gratuity mandatory for employers with 10 or more employees and sets the 15/26 formula, the 5-year eligibility rule, and the ₹20 lakh ceiling.
- Continuous Service
- Uninterrupted service with one employer, including paid leave and authorised breaks. 240 days worked in a year is treated as a completed year for eligibility.
- Covered Employer
- An employer with 10 or more employees, who falls under the Payment of Gratuity Act and must use the 15/26 formula on a 26-day month.
- Last-Drawn Salary
- The most recent monthly Basic salary plus Dearness Allowance (DA) used in the covered-employer formula. Other allowances such as HRA and bonus are excluded.
- Dearness Allowance (DA)
- A cost-of-living component of salary, common in government and some private pay structures. It is added to Basic when calculating gratuity.
- Section 10(10)
- The Income Tax Act provision that exempts gratuity from tax — fully for government employees, and up to a ₹20 lakh lifetime limit for private employees.
- Ex-gratia
- Any amount an employer pays above the statutory gratuity ceiling. It is voluntary, not mandatory, and is fully taxable as salary income.
- Fixed-Term Employee
- An employee hired on a fixed-duration contract. Under the Code on Social Security, 2020, they earn gratuity pro-rata after 1 year of service — unlike permanent staff, who need 5 years.
- Code on Social Security, 2020
- A new labour code, in force from 21 November 2025, that consolidates social-security laws. It extended gratuity to fixed-term employees after 1 year and set a 30-day payment deadline.
Help & answers
Frequently asked questions
Everything you need to know about how the Gratuity Calculator works.
01What is a gratuity calculator?
A gratuity calculator works out the lump-sum gratuity an employee receives for long service in India. Enter your last-drawn salary (Basic + DA) and years of service, and it applies the Payment of Gratuity Act formula, checks your eligibility, and shows how much of the amount is tax-free.
02How is gratuity calculated in India?
Gratuity = (15 × last-drawn monthly salary × years of service) ÷ 26 for employers covered by the Act. The salary is Basic + DA only. For example, at ₹60,000 salary and 10 years, gratuity = 15 × 60,000 × 10 ÷ 26 = ₹3,46,154.
03What is the gratuity formula for covered vs non-covered employers?
Covered employers (10+ employees) use 15 days’ salary per year on a 26-day month: (15 × salary × years) ÷ 26. Non-covered employers use a 30-day month: (15 × salary × years) ÷ 30, which is about 13% lower, and count only fully completed years.
04Who is eligible for gratuity?
You need 5 years of continuous service with the same employer. The exception is death or disablement, where the 5-year rule does not apply and gratuity is paid regardless of tenure. Gratuity is paid on resignation, retirement, or termination once you cross 5 years.
05Can I get gratuity after 4 years and 240 days?
Often yes. Courts have held that 240 days worked in the 5th year counts as a completed year (Mettur Beardsell, Madras High Court), so 4 years plus 240 days (about 4 years 8 months) can qualify. Some employers and states still insist on a full 5 years, so confirm with your employer.
06Do fixed-term or contract employees get gratuity?
Yes — after just 1 year. Under the Code on Social Security, 2020 (effective 21 November 2025), fixed-term and contract employees vest gratuity pro-rata after 1 year of continuous service, not 5. The same 15-days-per-year formula applies. Permanent employees still need 5 years.
07How did the 2026 Labour Code change gratuity?
The Code on Social Security, 2020 (in force from 21 November 2025) added pro-rata gratuity for fixed-term employees after 1 year, requires payment within 30 days, and broadens the wage base — Basic + DA must be at least 50% of total pay, which can raise gratuity. The 5-year rule still applies to permanent staff.
08Is gratuity taxable?
Government employees pay no tax on gratuity — it is fully exempt. Private-sector employees get tax-free gratuity up to a ₹20 lakh lifetime limit under Section 10(10); any amount above that is added to salary income and taxed at your slab rate.
09What is the maximum gratuity amount?
The maximum mandatory gratuity under the Act is ₹20 lakh for private-sector employees; the central government ceiling is ₹25 lakh. An employer can pay more, but the excess over ₹20 lakh is ex-gratia (not mandatory) and is fully taxable.
10What salary is used to calculate gratuity?
Only Basic salary plus Dearness Allowance (DA) is used — not gross salary. HRA, bonus, overtime, and other allowances are excluded. Covered employers use your last-drawn Basic + DA; non-covered employers use the average of your last 10 months.
11Is gratuity paid if I resign before 5 years?
Generally no. Gratuity needs 5 years of continuous service, so resigning at 3 or 4 years usually means no gratuity. The only exceptions are death or disablement, and the 4-year-240-day rule that can deem the 5th year complete in some jurisdictions.
12How are months rounded in gratuity calculation?
For a covered employer, a part-year of more than 6 months rounds up to a full year — so 10 years 7 months counts as 11 years, but 10 years 6 months counts as 10. Non-covered employers ignore the extra months and count only completed years.
13What is the ₹20 lakh gratuity exemption limit?
It is the lifetime cap on tax-free gratuity for non-government employees under Section 10(10). It applies across all employers combined — so if you claimed ₹5 lakh tax-free earlier, only ₹15 lakh of headroom remains. Enter prior exempt gratuity to see your true tax-free amount.
14Is this gratuity calculator free and accurate?
Yes — it is free, needs no sign-up, and runs in your browser. The formula follows the Payment of Gratuity Act, 1972 and the Section 10(10) tax rules, including covered vs non-covered employers and the ₹20 lakh lifetime exemption. For disputed eligibility, confirm with your employer or a labour-law adviser.
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