Gratuity Calculator
Calculate your gratuity based on years of service
Enter Your Details
Rs
Enter your last drawn Basic Salary + Dearness Allowance
Minimum 5 years required for eligibility
Your Gratuity
Total Gratuity Payable
Rs 0
Enter salary and years to calculate
Formula Applied
Monthly Salary (Basic + DA)
Rs 50,000
Days of wages per year
15
Years of Service
10
Working days in a month
26
Tax-free up to Rs 20 lakh for private sector employees under Section 10(10). Government employees receive full exemption.
Estimation only - consult a tax professional for accurate advice.
How Gratuity is Calculated
Under the Payment of Gratuity Act, 1972, gratuity is calculated using a simple formula:
Gratuity Formula:
Gratuity = (Monthly Salary x 15 x Years of Service) / 26
Monthly Salary = Basic + DA | 15 = Days of wages per year | 26 = Working days in a month
Example Calculation
- Basic + DA: Rs 50,000/month
- Years of Service: 20 years
Gratuity = (50,000 x 15 x 20) / 26 = Rs 5,76,923
Eligibility Criteria
- Minimum 5 years of continuous service with the same employer
- Applicable on retirement, resignation, death, or disablement
- The 5-year rule is waived in case of death or disablement
- Applies to establishments with 10 or more employees
- Covers factories, mines, plantations, ports, railways, shops, and other establishments
Tax Treatment
- Government employees: Entire gratuity is fully exempt from tax
- Private sector employees: Exempt up to Rs 20,00,000 under Section 10(10)
- Amount exceeding Rs 20 lakh is taxable at your slab rate
- The Rs 20 lakh limit is aggregate across all employers in your career
Frequently Asked Questions
Gratuity = (Monthly Salary x 15 x Years of Service) / 26. Monthly Salary means Basic + DA. The formula assumes 26 working days in a month and rewards 15 days' wages for each year of service.
5 years of continuous service is required. However, this condition is waived if the employee dies or becomes disabled due to accident or disease.
For private sector employees, gratuity up to Rs 20 lakh is tax-free. Government employees receive full exemption. Any amount above Rs 20 lakh is taxed at your applicable income tax slab.
Only Basic Salary and Dearness Allowance (DA) are considered. HRA, special allowances, bonuses, and other components are not included.
If you have worked 6 months or more beyond completed years, it rounds up to the next year. Example: 8 years 7 months = 9 years. Less than 6 months is ignored (8 years 5 months = 8 years).