What is the gratuity formula used here?

(15 ÷ 26) × last drawn monthly salary (basic + DA) × years of service, capped at ₹20 lakh — the Payment of Gratuity Act formula for covered establishments. The 15/26 factor pays 15 days of wages for every completed year, treating a month as 26 working days.

When am I eligible for gratuity?

Generally after 5 years of continuous service with the same employer; the condition is waived if service ends due to death or disablement. Note that the calculator itself doesn’t enforce this — it will produce a figure for 3 years of service, but a covered employer normally owes nothing before the 5-year mark.

How are part years counted?

Service of six months or more in the final year rounds up to a full year, and less than six months rounds down — matching how the Act treats covered employees. So 12 years 7 months pays as 13 years, while 12 years 4 months pays as 12.

Which salary goes into the formula?

Only your last drawn basic pay plus dearness allowance. HRA, special allowance, bonus, overtime and perquisites are excluded — which is why gratuity is often smaller than people expect relative to CTC.

For government employees it is fully exempt. For private-sector employees covered by the Act, it is exempt up to ₹20 lakh (as of July 2026) — a lifetime aggregate across employers — and anything beyond the exempt amount is taxed as salary income.

What if my employer isn’t covered by the Act?

A different convention applies: half a month’s average salary (based on the last 10 months’ average, with a 30-day month) per completed year, and part years don’t round up. This tool models only the covered-establishment 15/26 formula, so it will overstate gratuity for non-covered employment.

Gratuity Calculator

Estimate gratuity payable from last drawn salary and years of service.

Runs in your browser — files never leave your device

Last monthly salary (Basic+DA)₹Years of service

Gratuity payable

₹2,88,461.54

Capped at ₹20,00,000. Years rounded; ≥6 months counts as a full year.

How it works

This calculator estimates the gratuity payable when you leave a job after long service, using the formula in the Payment of Gratuity Act, 1972 for covered establishments. It needs just two inputs: your last drawn monthly salary — basic plus dearness allowance only — and your total years of service.

The formula: gratuity = (15 ÷ 26) × last drawn monthly salary (basic + DA) × completed years of service. The 15/26 factor grants 15 days’ wages for every year served, treating a month as 26 working days. Years are rounded to the nearest whole number, so six months or more counts as a full year — 10 years 7 months pays as 11 years, 10 years 4 months as 10. The result is capped at ₹20,00,000, the statutory maximum under the Act (as of July 2026).

Worked example with the defaults — last drawn basic + DA of ₹50,000 and 10 years of service. Fifteen twenty-sixths of ₹50,000 is ₹28,846.15 per year of service; multiplied by 10 years, that gives ₹2,88,461.54. Stay 10 years 6 months instead and the tool rounds service up to 11 years, lifting the payout to ₹3,17,307.69. At the other end, ₹2,00,000 basic + DA over 35 years works out to ₹40,38,461.54 raw — but the tool pays out the ₹20,00,000 cap.

Know what is not modeled. The tool doesn’t check eligibility: under the Act you generally need 5 years of continuous service before any gratuity is due (waived on death or disablement), yet the calculator will produce a figure for any tenure. It applies only the covered-establishment formula — employees outside the Act are conventionally paid half a month’s average salary per year on a 30-day-month basis, a different and usually smaller number — and employers may pay more than the statutory figure as ex gratia. For covered private-sector employees, ₹20 lakh is also the lifetime tax-exemption ceiling (as of July 2026). Treat these as estimates for planning — verify with official rules or a CA.

Frequently asked questions

What is the gratuity formula used here?: (15 ÷ 26) × last drawn monthly salary (basic + DA) × years of service, capped at ₹20 lakh — the Payment of Gratuity Act formula for covered establishments. The 15/26 factor pays 15 days of wages for every completed year, treating a month as 26 working days.
When am I eligible for gratuity?: Generally after 5 years of continuous service with the same employer; the condition is waived if service ends due to death or disablement. Note that the calculator itself doesn’t enforce this — it will produce a figure for 3 years of service, but a covered employer normally owes nothing before the 5-year mark.
How are part years counted?: Service of six months or more in the final year rounds up to a full year, and less than six months rounds down — matching how the Act treats covered employees. So 12 years 7 months pays as 13 years, while 12 years 4 months pays as 12.
Which salary goes into the formula?: Only your last drawn basic pay plus dearness allowance. HRA, special allowance, bonus, overtime and perquisites are excluded — which is why gratuity is often smaller than people expect relative to CTC.
Is gratuity taxable?: For government employees it is fully exempt. For private-sector employees covered by the Act, it is exempt up to ₹20 lakh (as of July 2026) — a lifetime aggregate across employers — and anything beyond the exempt amount is taxed as salary income.
What if my employer isn’t covered by the Act?: A different convention applies: half a month’s average salary (based on the last 10 months’ average, with a 30-day month) per completed year, and part years don’t round up. This tool models only the covered-establishment 15/26 formula, so it will overstate gratuity for non-covered employment.

Gratuity Calculator

How it works

Frequently asked questions

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