Updated for FY 2025–26

Gratuity Calculator

Calculate your gratuity amount based on last drawn salary and years of service. Covers both Act-covered and non-covered employees.

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₹5K₹5L
yr
1 yr40 yr

Formula (Gratuity Act)

Gratuity = (15 ÷ 26) × Basic+DA × Years

15 days' pay per year of service, divided over 26 working days in a month. Applicable to establishments with 10+ employees.

Quick presets

Gratuity Amount

₹2,88,462

For 10 years of service

Tax-Exempt Limit

₹20,00,000

Tax-Exempt Gratuity

₹2,88,462

Taxable Gratuity

₹0

Monthly Equivalent

₹2,404/mo

Gratuity Breakdown

Last Basic + DA ₹50,000/mo
Years of Service 10 years
Formula Used 15/26
Days per Year 15 days
Gratuity Amount ₹2,88,462

Eligibility Note

Minimum 5 years of continuous service required for gratuity. In case of death or disability, the 5-year rule is waived.

How is Gratuity Calculated?

Under the Payment of Gratuity Act, 1972, gratuity is calculated as:

Gratuity = (15/26) × Last Salary × Years

Where 15 = days' pay per year, 26 = working days in a month, Last Salary = Basic + DA only.

For employees not covered by the Act, the formula uses 30 instead of 26 in the denominator, giving a lower payout per year of service.

Gratuity Example

₹50K salary · 10 years ₹2,88,462
(15÷26) × 50,000 × 10 = ₹2,88,462
₹1L salary · 20 years ₹11,53,846
(15÷26) × 1,00,000 × 20 = ₹11,53,846
₹2L salary · 30 years ₹34,61,538 (capped at ₹20L tax-free)
(15÷26) × 2,00,000 × 30 = ₹34,61,538
Tax-exempt limit
Gratuity up to ₹20 lakh is fully exempt from income tax under Section 10(10) of the Income Tax Act.

Gratuity Eligibility Rules

  • →5-year rule — you must complete at least 5 years of continuous service to claim gratuity on resignation or retirement.
  • →Death/Disability — in case of death or permanent disability, gratuity is paid regardless of service duration.
  • →4 years 240 days — Supreme Court ruling: if an employee completes 4 years and 240 days (about 4 years 8 months), they are considered eligible.
  • →Employer size — the Gratuity Act applies to establishments with 10 or more employees. Once applicable, it continues even if headcount drops below 10.

Gratuity Tax Rules

Government employees Fully exempt
Act-covered private employees Up to ₹20L exempt
Non-Act employees Up to ₹10L exempt
Amount above limit Taxable as salary

* Tax exemption limits as per Section 10(10) of the Income Tax Act. Consult a CA for your specific situation.

Frequently Asked Questions

Common questions about gratuity calculation in India

What is the gratuity formula in India?
For employees covered by the Payment of Gratuity Act: Gratuity = (15/26) × Last Basic+DA × Years of Service. For those not covered: Gratuity = (15/30) × Last Basic+DA × Years. The formula counts 15 days' pay for each year of service.
Is gratuity taxable in India?
Gratuity up to ₹20 lakh is fully tax-exempt for private sector employees covered under the Gratuity Act. Any amount above ₹20 lakh is added to your income and taxed at your applicable slab rate. Government employees enjoy full exemption with no upper limit.
Can gratuity be paid before 5 years?
Generally, no. The 5-year minimum service rule must be met. However, exceptions apply in cases of death or permanent disability — gratuity is paid from the very first day of employment in such scenarios. Additionally, the Supreme Court has held that 4 years and 240 days qualifies.
When must an employer pay gratuity?
Under the Payment of Gratuity Act, an employer must pay gratuity within 30 days of the gratuity becoming payable. If payment is delayed, interest at the prescribed rate must be paid. Failure to pay can result in prosecution and penalties.

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