Your last drawn basic salary plus dearness allowance.
At least 5 years of continuous service is usually needed.
Under the Act, more than 6 months counts as a full year.
Most employers with 10 or more staff are covered.
Quick examples
10 years counted at a last salary of ₹50,000.
What each result means
Gratuity payable
What it is: Formula amount for your service.
Your value: ₹2,88,462
Paid by the employer when you leave.
Years counted
What it is: Service years after rounding rules.
Your value: 10 years
Covered: above 6 months rounds up.
Tax-free part
What it is: Up to ₹20,00,000 for private employees.
Your value: ₹2,88,462
Lifetime limit across employers.
Taxable part
What it is: Amount above the tax-free limit.
Your value: ₹0
Added to salary income.
Year-by-year breakdown
| Years of service | Gratuity at that point (₹) |
|---|---|
| 1 | ₹28,846 |
| 2 | ₹57,692 |
| 3 | ₹86,538 |
Each row shows the gratuity if you left after that many years at your current last salary.
Showing the first 3 of 10 years. Want charts, formulas and the full schedule? Get the detailed PDF.
What this calculator does
Gratuity is a lump sum your employer pays when you leave after at least 5 years of continuous service. If the employer is covered by the Payment of Gratuity Act, it is 15 days' salary per year on a 26-day month. If not covered, the usual formula uses a 30-day month and completed years only.
What your result means
Gratuity rises with both years of service and your last salary, so a late-career raise lifts the whole amount.
Formula
1. Gratuity
Symbols
- G
- Gratuity (₹)
- S
- Last monthly basic + DA (₹)
- Y
- Years counted
Why this formula works
15 days' wages for each year of service; one day's wage is the monthly salary ÷ 26 working days.
Unit check
₹ = ₹ × years. ✓
Worked example
S = ₹50,000, Y = 10: G = ₹2,88,462.
Common mistakes
Using gross salary instead of basic + DA. Rounding 6 months or less up.
Working for your numbers
- G = ₹50,000 × 15 × 10 ÷ 26
- G = ₹2,88,462
Frequently asked questions
Do I get gratuity before 5 years?
Usually no, except on death or disability. Some courts have counted 4 years and 240 days; check with your employer.
Is gratuity taxable?
For private employees, up to ₹20,00,000 in a lifetime is tax-free; the rest is taxed as salary.
Does this calculator tell me what to do?
No. It is an educational estimate using published rules. It does not know your full situation. For a personal decision, speak to a qualified tax professional or a SEBI-registered investment adviser.
Symbols and assumptions
- S
- Last basic + DA (₹)
- Y
- Years
- Last salary stays the same for the table.
- Continuous service with one employer.
- Tax-free limit for non-government employees.
- Figures are in Indian Rupees (₹).
Sources and review
Reviewed 2026-10-05 · Next review 2026-12-31
- Ministry of Labour and Employment — Payment of Gratuity Act
- Income Tax Department — tax calculators and rules
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How it works
Uses the statutory formula based on last drawn basic salary and tenure.
The formula
Gratuity = (15 × Last Basic × Tenure) / 26- Basic
- Basic Salary + DA
- Tenure
- Years of Service (>4.5 years)
Worked example
Gratuity for 10 years service at ₹80,000 basic.
Pro tips
- Gratuity is usually tax-free up to ₹20 Lakh.
- Completion of 5 years is mandatory for eligibility.
Common mistakes
- Including bonus or HRA in the gratuity calculation.
Go deeper
Concepts to explore
Related guides
Institutional grade calculations are illustrative and for educational wealth architecture. Results do not constitute investment advice.