About the Gratuity Calculator
Gratuity Calculator estimates the lump sum an employee in India receives from an employer when leaving after long service. Enter your last drawn monthly salary, meaning basic pay plus dearness allowance, then your years and extra months of service. If your employer is covered by the Payment of Gratuity Act, 1972, the tool uses the standard formula of salary times 15 divided by 26 times the years of service, and counts a part-year of more than six months as a full year. For employers not covered, it uses salary times 15 divided by 30 and completed years only. The ₹20 lakh limit is applied and shown, and a note appears when service is below the usual five-year condition. It is an estimate made in your browser and nothing is stored.
Updated September 2026
How to use the Gratuity Calculator
- 1Enter your last drawn monthly salary: basic pay plus dearness allowance only.
- 2Enter your years of service and any extra months from 0 to 11.
- 3Choose whether your employer is covered by the Gratuity Act. Most firms with 10 or more staff are.
- 4Read the gratuity amount, the counted years and the gratuity for one year of service.
- 5Check the notes about eligibility and the maximum limit.
What gratuity is
Gratuity is a thank-you payment from an employer for long, continuous service. In India it is governed by the Payment of Gratuity Act, 1972, which applies to factories, mines, shops and other establishments with ten or more employees. It is paid when an employee retires, resigns after the qualifying service, or leaves because of death or disablement.
Because it is set by a formula, you can work out roughly how much to expect years in advance. That helps when planning a job change, a retirement or a loan.
How the tool works
- Covered employers: last salary × 15 ÷ 26 × counted years, with part-years above 6 months rounded up.
- Not covered: last salary × 15 ÷ 30 × completed years.
- The result is limited to ₹20 lakh, and the tool says when that limit was applied.
- A note appears when service is below about four years and eight months.
An example
An employee with basic plus DA of ₹60,000 leaves after 10 years and 8 months. The part-year is more than six months, so 11 years are counted. Gratuity is 60,000 × 15 ÷ 26 × 11, which is about ₹3,80,769. The same salary with 10 years and 3 months counts as 10 years and gives about ₹3,46,154. The tool shows the gratuity for one year of service so you can see what each extra year adds.
Use the last drawn salary at the time of leaving, not your average pay. A pay rise just before the exit date therefore lifts the whole amount.
Limits and related tools
This is an estimate. Your employer may have a more generous policy, and rules on fixed-term staff, part-time work and tax treatment are updated from time to time, so check the latest position and your appointment letter. The tool does not decide eligibility for you.
For related sums, Salary Calculator turns annual pay into monthly and weekly amounts, PPF Calculator and FD Calculator show how a lump sum can grow, Percentage Calculator handles pay rises and Inflation Calculator shows what the money will buy in future.
Features
- Standard 15 ÷ 26 formula for covered employers
- 15 ÷ 30 formula for employers outside the Act
- Part-year rounding: more than 6 months counts as a year
- ₹20 lakh maximum applied and explained
- Indian digit grouping for rupee amounts
- Eligibility reminder for the five-year rule
- Copy the result
- Runs in your browser
Frequently asked questions
What is the gratuity formula?
For employees of establishments covered by the Payment of Gratuity Act, gratuity is last drawn monthly salary times 15, divided by 26, times the years of service. With a salary of ₹50,000 and 8 years of service, it is 50,000 × 15 ÷ 26 × 8, which is about ₹2,30,769.
Why is it divided by 26?
The Act takes a month as 26 working days, so 15 days of pay is worked out as 15 ÷ 26 of a month's salary. For employers not covered by the Act, the calculation uses a 30-day month, so it is salary times 15 divided by 30 for each completed year.
What counts as salary for gratuity?
The Act uses the last drawn basic pay plus dearness allowance. House rent allowance, bonuses, overtime and special allowances are left out unless your employer's rules include them, so use only your basic and DA figure.
How are months of service counted?
For employers covered by the Act, a part-year of more than six months is rounded up to a full year, so 8 years and 7 months counts as 9 years, while 8 years and 6 months counts as 8. For employers outside the Act, only completed years are used.
Do I need five years of service?
Normally yes: gratuity is paid after five years of continuous service. Courts have treated 4 years and 240 days as enough in some cases, and the five-year condition does not apply on death or disablement. Rules for fixed-term staff are changing, so check current rules and your contract.
Is there a maximum amount?
Yes. The limit under the Act is ₹20 lakh, and the tool applies it and tells you when it has. Some employers pay more under their own scheme, and the income tax exemption is also linked to a limit, so check your payslip and tax rules.
Is gratuity taxable?
Gratuity is generally exempt from income tax up to the statutory limit for employees, and the part above it is taxed as salary. The rules depend on whether you are a government employee or covered by the Act, and they can change, so confirm with your employer or a tax professional.