🎁 Gratuity Calculator
Find out how much gratuity you'll receive when you leave your job.
💡 Getting a gratuity payout? Learn how to invest it wisely.
📣 Join Free Telegram See How It Can Grow →How gratuity is calculated
Gratuity is a thank-you payment your employer must give you if you complete 5 or more years of continuous service (the 5-year rule is waived in case of death or disability). Under the Payment of Gratuity Act, the formula is:
Gratuity = Last salary (Basic + DA) × 15⁄26 × Years of service
15/26 represents 15 days' wages out of 26 working days per month. In the final year, service of more than 6 months counts as a full year — e.g. 10 years 7 months counts as 11 years. Gratuity is tax-free up to the government limit (currently ₹20 lakh for employees covered by the Act).
Important notes
Only Basic salary + Dearness Allowance count — not HRA, bonuses or other allowances. Employers can always pay MORE than the formula; this is the legal minimum for covered establishments (10+ employees).
Frequently Asked Questions
- Do I get gratuity before 5 years of service?
- Generally no — 5 years of continuous service is required. Exceptions: death or disablement, where the 5-year rule does not apply.
- Is gratuity taxable?
- For employees covered under the Act, gratuity is tax-free up to ₹20 lakh (lifetime limit). Any amount above that is taxable as salary.
- Which salary is used — my full CTC?
- No. Only your last drawn Basic + Dearness Allowance is used, not HRA, bonuses or your full CTC.
More free calculators
⚠️ This calculator is for educational and estimation purposes only and is not legal or tax advice. Rules differ for employees not covered by the Payment of Gratuity Act — confirm with your HR department.