Gratuity Calculator India
Calculate your statutory gratuity entitlement using the Payment of Gratuity Act 1972 formula. Enter your last drawn salary and years of service for an instant result.
How to Use This Gratuity Calculator
Using the gratuity calculator is straightforward. Enter two values:
Monthly Salary (Basic + DA): Enter your last drawn basic salary plus any dearness allowance. Do not include HRA, travel allowance, or performance bonuses — these are excluded under the Act.
Years of Service: Enter the total number of completed years you have worked for your current employer. You must have a minimum of 5 years of continuous service to be eligible. For service periods with more than 6 months in the last year, you may round up to the next whole year — for example, 6 years and 8 months counts as 7 years.
The calculator will instantly display your gratuity amount based on the statutory formula.
Gratuity Calculation Formula (Payment of Gratuity Act 1972)
The formula prescribed under the Payment of Gratuity Act 1972 for employees covered under the Act is:
Gratuity = (Last drawn salary × 15 × Years of service) / 26
Where:
Last drawn salary = Basic salary + Dearness Allowance (DA). Other components are excluded.
15 = Number of days of salary per year of service (half a month, as per the Act).
26 = Number of working days in a month assumed by the Act (excludes Sundays).
Years of service = Completed years of continuous service with the same employer.
For employees not covered under the Payment of Gratuity Act (typically companies with fewer than 10 employees), a different formula may apply: (Last drawn salary × 15 × Years of service) / 30. This calculator uses the statutory Act formula.
Gratuity Calculation Example
Let's walk through a practical example:
Situation: An employee at a private company has a basic salary + DA of ₹50,000 per month and has completed 10 years of continuous service.
Calculation:
Gratuity = (50,000 × 15 × 10) / 26 = 75,00,000 / 26 = ₹2,88,461
This amount (₹2,88,461) is well below the ₹20 lakh tax exemption limit, so the entire gratuity would be tax-free for this employee.
Now consider a senior employee with a monthly basic + DA of ₹1,50,000 and 30 years of service:
Gratuity = (1,50,000 × 15 × 30) / 26 = 6,75,00,000 / 26 = ₹25,96,154
Here, the gratuity exceeds ₹20 lakh. The first ₹20 lakh is tax-exempt; the remaining ₹5,96,154 would be added to income and taxed at the applicable slab rate.
Frequently Asked Questions — Gratuity Calculator India
What is the gratuity formula in India?
Under the Payment of Gratuity Act 1972, gratuity is calculated as: (Last drawn basic salary + DA) × 15 × Years of service / 26. The divisor 26 represents working days per month; 15 represents half a month's salary per year served.
What is the minimum service period to be eligible for gratuity?
You must have completed a minimum of 5 continuous years of service with the same employer to be eligible for gratuity. This requirement is waived in case of death or disability — in those situations, gratuity is payable regardless of service length.
Is gratuity taxable in India?
Gratuity received by government employees is fully exempt from income tax. For private sector employees covered under the Payment of Gratuity Act, the lesser of the following is exempt: actual gratuity received, ₹20 lakh, or the formula-calculated amount. Any excess is taxable as salary. Consult a qualified CA for your specific tax situation.
What salary is considered for gratuity calculation?
For gratuity purposes, "salary" means the last drawn basic salary plus dearness allowance (DA). HRA, travel allowance, performance bonuses, medical allowances, and all other components are excluded. This is one of the most common sources of confusion — always use only basic + DA.
What is the maximum tax-exempt gratuity amount?
The maximum tax-exempt gratuity for private sector employees is ₹20 lakh (₹20,00,000). This limit was revised in 2019. Government employees have full exemption with no upper cap. Any gratuity received above ₹20 lakh by private sector employees is added to income and taxed at the applicable slab rate.
Related Calculators
Disclaimer: Results are for informational and educational purposes only. This is not financial advice. Consult a SEBI-registered financial advisor or a qualified Chartered Accountant before making financial decisions. Gratuity calculations are estimates based on the Payment of Gratuity Act 1972 formula and may vary based on employer policies, applicable amendments, and legal interpretations specific to your employment contract.