About the Gratuity Calculator
Gratuity is a lump sum your employer pays when you leave after at least 5 years of service. It equals 15/26 × last monthly basic + DA × years of service. With a ₹50,000 basic + DA and 10 years 7 months of service, it is ₹3,17,308.
How it is calculated
Gratuity = 15 × last monthly (basic + DA) × years of service ÷ 26
- 15 days of wages for each year of service, where a month is taken as 26 working days.
- A final part-year of more than 6 months counts as a full year.
- If your employer is not covered by the Payment of Gratuity Act, the formula is 15/30 and only completed years count.
Worked example
Inputs: ₹50,000 basic + DA, 10 years 7 months of service, employer covered.
Result: 11 years counted, gratuity ₹3,17,308.
Rules and assumptions
- Permanent employees need 5 years of continuous service. Fixed-term employees qualify after 1 year under the Code on Social Security, in force since 21 November 2025.
- Gratuity up to ₹20 lakh is tax-free for private-sector employees. Central government employees have a ₹25 lakh limit.
- Under the labour codes, "wages" must be at least half of your total pay, which can raise the salary used for gratuity.
Frequently asked questions
How is gratuity calculated?
Gratuity = 15 × last monthly basic + DA × years of service ÷ 26, for employers covered by the Act. A final part-year over 6 months counts as a full year.
Am I eligible for gratuity before 5 years?
Permanent employees generally need 5 years, except in case of death or disability. Fixed-term employees qualify after 1 year.
Is gratuity taxable?
Gratuity up to ₹20 lakh is tax-free for private-sector employees. Any amount above that is taxed as salary.
What salary is used for gratuity?
Your last drawn basic salary plus dearness allowance.