# Gratuity Calculator

> Gratuity due on leaving a job, under the 15/26 formula, with the taxable part above ₹20 lakh.

Interactive calculator: https://www.cashiq.in/tools/gratuity-calculator
Last updated: 2026-11-10

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
- Open it: https://www.cashiq.in/tools/gratuity-calculator?salary=50000&years=10&months=7&covered=yes

## Use it with your own numbers

Add query parameters to the calculator URL. The page renders the result, a one-sentence summary and a year-by-year table in its HTML.

| Parameter | Meaning | Allowed values |
| --- | --- | --- |
| `salary` | Last monthly basic + DA | 1,000 to 1,00,00,000 |
| `years` | Completed years of service | 1 to 50 |
| `months` | Extra months | 0 to 11 |
| `covered` | Employer covered by the Gratuity Act? | yes | no |

Example: https://www.cashiq.in/tools/gratuity-calculator?salary=50000&years=10&months=7&covered=yes

JSON API: https://www.cashiq.in/api/v1/gratuity-calculator?salary=50000&years=10&months=7&covered=yes

## 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.

## Sources

- [Ministry of Labour and Employment](https://labour.gov.in/)
- [Income Tax Department](https://www.incometax.gov.in/)

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Results are estimates for planning, not investment, tax or legal advice. Returns are assumptions, not guarantees. Source: CashIQ, https://www.cashiq.in/tools/gratuity-calculator