Gratuity Calculator

Gratuity is a lump sum your employer pays you when you leave, retire or resign after years of service. It is a reward for long service and is set by law, so you can calculate it exactly from your last salary and your years at the company.

How to use the gratuity calculator

1. Enter your last monthly basic salary + DA.
2. Enter your years and extra months of service.
3. Choose whether your employer is covered by the gratuity law. Most companies with 10 or more employees are.

Gratuity formula

Covered employers:     Gratuity = 15 × Last salary × Years ÷ 26
Not covered:           Gratuity = 15 × Last salary × Completed years ÷ 30

• Last salary means basic pay plus dearness allowance.
• For covered employers, a part-year of more than six months counts as a full year.
• 15 stands for 15 days' wages for each year, and 26 is the number of working days in a month.

Example

Your last basic + DA is ₹50,000 and you worked for 10 years 7 months at a covered company.

• Years counted = 11 (7 months is more than six)
• Gratuity = 15 × 50,000 × 11 ÷ 26 = ₹3,17,308
• All of it is tax-free, since it is below ₹20 lakh.

At a company not covered by the law, the same service counts as 10 years: 15 × 50,000 × 10 ÷ 30 = ₹2,50,000.

Eligibility

• Usually 5 years of continuous service is needed.
• Under the new labour codes in force from November 2025, fixed-term employees become eligible after 1 year.
• On death or disability, gratuity is paid regardless of the years of service.
• The employer must pay it within 30 days of it becoming due.

Tax on gratuity

• Non-government employees: tax-free up to ₹20 lakh in total over your working life. The rest is taxed as income.
• Government employees: gratuity is fully tax-free.

The gratuity law also caps the amount an employer must pay at ₹20 lakh, though employers can pay more.