Gratuity Calculator
Work out the gratuity your employer owes you when you resign or retire, using the formula from the Payment of Gratuity Act.
The maximum gratuity for private sector employees is ₹20 lakh, which is also the tax-exempt limit. Central government employees have a ₹25 lakh limit.
How to use Gratuity Calculator
- Enter your last drawn monthly basic salary plus dearness allowance.
- Enter your years and months of service.
- Choose whether your employer is covered under the Gratuity Act (most companies with 10+ employees are).
- See your gratuity amount and the formula used.
Frequently asked questions
What is the gratuity formula?
For employers covered by the Act: Gratuity = 15 × last drawn salary × years of service ÷ 26. Salary means basic pay plus dearness allowance. For employers not covered, the divisor is 30.
How many years of service are needed for gratuity?
Normally 5 years of continuous service. Service of 4 years and 240 days is often treated as 5 years by courts. Under the new labour codes, fixed-term employees can be eligible after one year.
Is gratuity taxable?
For private sector employees, gratuity up to ₹20 lakh in total over your career is tax-free. Government employees’ gratuity is fully exempt.
How are partial years counted?
If your employer is covered by the Act, a part-year of more than 6 months is rounded up to a full year. So 7 years and 7 months counts as 8 years.
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