Gratuity Calculator
Gratuity is a lump sum an employer pays when you leave after long service. Enter your last drawn pay and years of service to see the amount.
Results
Gratuity payable
₹4,50,000
- Eligibility
- Eligible (5 or more years of service)
- Years counted
- 13
- Before the cap
- ₹4,50,000
- After the cap
- ₹4,50,000
Gratuity is ₹4,50,000 for 13 counted years of service on a last drawn salary of ₹60,000.
Show the calculation steps
- Service = 12 years 8 months. A part year of more than 6 months rounds up, so 13 years count.
- Gratuity = last drawn salary × 15 ÷ 26 × years of service = ₹60,000 × 15 ÷ 26 × 13 = ₹4,50,000.
- The amount is within the cap.
- Gratuity is payable after five years of continuous service.
- Last drawn salary means basic salary plus dearness allowance. Gratuity up to a limit is tax-free for most employees. The cap is set by the government and is an input here; check the current limit.
The formula
For employees covered by the Payment of Gratuity Act, gratuity is last drawn monthly salary × 15 ÷ 26 × completed years of service, where a part year of more than six months is rounded up. The 26 reflects the days worked in a month.
Eligibility and limits
Gratuity is normally payable after five years of continuous service, except on death or disability. There is a statutory ceiling on the amount; gratuity up to specified limits is tax-free for most employees.
Formula
Gratuity = Last drawn salary × 15 ÷ 26 × Years of service (covered by the Act)
Gratuity = Last drawn salary × 15 ÷ 30 × Completed years (not covered)
Years: a part year of more than 6 months counts as a full year (under the Act)
Where:
- Last drawn salary
- = Basic salary + dearness allowance per month
- Years of service
- = Continuous service with the employer
Example calculation
₹60,000 last drawn salary, 12 years 8 months of service
Inputs
- Last Drawn Monthly Basic + DA
- ₹60,000
- Years of Service
- 12 years
- Additional Months
- 8 months
- Employer Covered by the Gratuity Act?
- Yes (15 ÷ 26 formula)
- Maximum Gratuity
- ₹20,00,000
Result
- Gratuity payable
- ₹4,50,000
- Eligibility
- Eligible (5 or more years of service)
- Years counted
- 13
- Before the cap
- ₹4,50,000
- After the cap
- ₹4,50,000
Step-by-step
- Service = 12 years 8 months. A part year of more than 6 months rounds up, so 13 years count.
- Gratuity = last drawn salary × 15 ÷ 26 × years of service = ₹60,000 × 15 ÷ 26 × 13 = ₹4,50,000.
- The amount is within the cap.
- Gratuity is payable after five years of continuous service.
Important notes
- The ceiling is an input because it is set by the government and can change. Tax exemption rules differ for government and private employees.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
How is gratuity calculated?
Last drawn salary × 15 ÷ 26 × years of service, with part years over 6 months rounded up (for employers covered by the Act).
Do I get gratuity after five years?
Generally yes; five years of continuous service is the usual condition.
Is gratuity taxable?
Gratuity up to a specified limit is tax-free for most employees. Amounts above it are taxable.
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