🎖️ Gratuity Calculator
Gratuity = (15 × Last Drawn Salary × Years of Service) / 26 — as per the Payment of Gratuity Act, 1972.
Frequently Asked Questions
How do I use the Gratuity Calculator?
Enter your Last Drawn Salary (Basic + DA) and your Years of Service, choose whether you are Covered or Not covered under the Payment of Gratuity Act, then click Calculate Gratuity to see your gratuity amount, the eligible years used, and the tax-exempt limit.
What is the gratuity formula under the Payment of Gratuity Act?
For employees covered under the Act, Gratuity = (15 × Last Drawn Salary × Years of Service) / 26, where "Last Drawn Salary" is Basic Pay + Dearness Allowance, and 26 represents the working days in a month. For employees not covered under the Act, employers may instead use 30 days per month: Gratuity = (15 × Last Drawn Salary × Years of Service) / 30.
Who is eligible to receive gratuity?
An employee is generally eligible for gratuity after completing at least 5 years of continuous service with the same employer. This 5-year requirement is waived in case of the employee's death or disablement due to accident or disease. Eligibility rules can vary based on your employment contract and state-specific regulations — confirm with your employer or a legal advisor.
How are years of service rounded for gratuity calculation?
If the number of months in your final year of service is 6 months or more, it is rounded up to the next full year. For example, 9 years 7 months is treated as 10 years, while 9 years 4 months is treated as 9 years.
Is gratuity taxable?
Gratuity received by government employees is fully tax-exempt. For employees covered under the Payment of Gratuity Act, the exemption is the least of the actual gratuity received, ₹20,00,000, or the amount calculated using the statutory formula. Any amount above the applicable exemption limit is taxable as salary income. These limits and rules are set by tax law and can change — confirm the current limits with your employer or a tax advisor before relying on them. For other retirement benefits, see our NPS Calculator.
What is the practical difference between the /26 and /30 formulas?
Both formulas use "15 days of salary per year of service" as the base, but differ in how a "day's salary" is defined. The /26 formula (for employees covered under the Act) treats 26 as the number of working days in a month, giving a daily rate of (monthly salary / 26). The /30 formula (sometimes used for employees not covered under the Act) treats a month as 30 days. Since 26 is smaller than 30, the /26 formula produces a higher daily rate and therefore a higher gratuity amount for the same salary and years of service.
What happens if I have less than 5 years of service?
If your years of service are less than 5, this calculator still computes a gratuity figure using the formula, but shows a notice that you are not eligible to actually receive it under the standard rule. The 5-year requirement is waived only if employment ends due to death or disablement caused by accident or disease — in those cases, gratuity is payable regardless of tenure.