This gratuity calculator works out the lump sum you are owed under the Payment of Gratuity Act, 1972, from your last drawn Basic plus DA and your length of service. It applies the 15 by 26 formula, the six month rounding rule and the ₹20,00,000 statutory ceiling, and it tells you plainly when five years of service have not been completed. To see how the gratuity provision sits inside your package, use the salary breakup calculator, and for the monthly figure that reaches your bank use the in-hand salary calculator. No sign-up, and nothing you type leaves your browser.
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This gratuity calculator answers one question in rupees: when you leave, what lump sum does your employer legally owe you. Enter your last drawn monthly Basic plus Dearness Allowance and how long you have worked there, and the tool applies the statutory formula of fifteen days of wages for every completed year, divided by twenty six, with the six month rounding rule and the ₹20,00,000 ceiling both handled for you. It also does the thing most gratuity calculators skip, which is telling you clearly when five years of continuous service have not been completed and nothing is payable yet.
Gratuity is not part of your monthly pay, which is why it surprises people. It accrues quietly inside your CTC, usually as a provision of 4.81% of Basic plus DA, and it only becomes real money when you resign, retire, are retrenched, or in the case of death or permanent disablement. That timing is exactly why the number is worth knowing before you hand in a notice: leaving four months early can cost a full year of it. To see where the gratuity provision sits inside your package, run the same salary through the salary breakup calculator, and to understand what actually reaches your account each month use the in-hand salary calculator or the CTC to in-hand salary calculator. Since gratuity is tax-free up to a limit, the income tax calculator is the right next stop if your payout is unusually large. Everything here sits inside the wider set of salary calculators for India.
Two numbers and two dropdowns. The rounding, the ceiling and the eligibility check all happen without a page reload.
Jump back to the gratuity calculator and run your own figures.
Last drawn monthly Basic plus DA, employer covered by the Act, so the divisor is twenty six and the six month rounding rule applies. Every figure below was produced by the calculator on this page, not written by hand.
| Basic + DA | Service entered | Effective years | Formula amount | Gratuity payable |
|---|---|---|---|---|
| ₹25,000 | 5 years 0 months | 5 | ₹72,115 | ₹72,115 |
| ₹40,000 | 7 years 6 months | 8 | ₹1,84,615 | ₹1,84,615 |
| ₹50,000 | 10 years 0 months | 10 | ₹2,88,462 | ₹2,88,462 |
| ₹50,000 | 10 years 5 months | 10 | ₹2,88,462 | ₹2,88,462 |
| ₹1,00,000 | 20 years 0 months | 20 | ₹11,53,846 | ₹11,53,846 |
| ₹1,50,000 | 26 years 0 months | 26 | ₹22,50,000 | ₹20,00,000 |
Three rows in that table are worth sitting with. Rows three and four are the same salary and almost the same service, ten years against ten years and five months, and they pay exactly the same ₹2,88,462, because a part year under six months is simply dropped. One more month of service in row four would round the tenure to eleven years and add ₹28,846, which is a real cost to leaving in the wrong month. Row two shows the rule working the other way: seven years and six months hits the threshold exactly and counts as eight full years. The last row is the ceiling, where the formula produces ₹22,50,000 but only ₹20,00,000 is legally payable and tax-free, and anything above that is at the employer's discretion. To see how this lump sum fits alongside the rest of a final settlement, run the same salary through the leave encashment calculator, and to see how the gratuity provision was funded from your CTC all along use the CTC to in-hand salary calculator.
Gratuity is a lump sum an employer pays you for staying. It is not a bonus, not a share of profit and not something you contribute to out of your salary: it is a statutory reward for long service, governed by the Payment of Gratuity Act, 1972, and it falls due when you leave after five years or more. Because nothing about it appears on a monthly payslip, most people meet the number for the first time on a full and final settlement sheet, with no way to check whether it is right.
That is the gap this page fills. The calculator takes your last drawn monthly Basic plus Dearness Allowance and your exact length of service, and shows the statutory formula working line by line rather than handing back a single total. You see the effective tenure after the six month rounding rule, the formula amount before any ceiling, whether the ₹20,00,000 ceiling bit, and how much of the payout is exempt from income tax.
It answers the planning question too, which is usually the more valuable one. Gratuity is unusually sensitive to your leaving date: the difference between four years eleven months and five years is the difference between nothing and a full payout, and the difference between ten years five months and ten years six months is a whole extra year in the formula. Knowing both thresholds before you resign is worth more than knowing the number afterwards. The gratuity provision your employer sets aside is part of your package all along, which you can see broken out in the salary breakup calculator and inside an offer letter with the CTC to in-hand salary calculator.
The gratuity formula for India, for any employee covered by the Act, is short enough to check by hand:
| Element | What it means |
|---|---|
| Last drawn salary | Monthly Basic plus Dearness Allowance only. HRA, conveyance, bonus and special allowance are excluded |
| 15 | Fifteen days of wages awarded for every completed year of service |
| 26 | Working days in a month, being thirty days less the four Sundays |
| Effective years | Completed years, plus one more if the part year runs to six months or more |
| Gratuity | Last drawn salary multiplied by 15, multiplied by effective years, divided by 26 |
Written out, gratuity equals last drawn Basic plus DA, times fifteen, times effective years of service, divided by twenty six. A worked rupee example makes it concrete. On a last drawn Basic plus DA of ₹50,000 with ten completed years of service, the arithmetic is ₹50,000 multiplied by 15, multiplied by 10, which is ₹75,00,000, divided by 26, which gives ₹2,88,462. That is roughly half a month's pay for every year worked, which is the intent behind the fifteen and the twenty six sitting together.
One detail catches people out repeatedly. The divisor is twenty six rather than thirty precisely because the fifteen days are working days, not calendar days. Using thirty by mistake understates the payout by about thirteen percent, which on a twenty year career is a serious error, so it is worth confirming which basis your employer is on before accepting a settlement figure.
Section 4(2) of the Act says gratuity is payable for every completed year of service and for any part year in excess of six months. In practice that means the part year is either promoted to a full year or discarded entirely, with nothing in between.
This is also the reason the calculator asks for years and months separately rather than accepting a decimal. Someone with ten years and seven months of service will often type 10.7, but 10.7 years is really ten years and eight point four months. In this instance both round up and the answer happens to survive, but the same habit turns ten years and three months into 10.3, and someone entering 10.11 for ten years and eleven months gets ten years and one point three months, which rounds the wrong way and understates their gratuity by a full year.
Gratuity eligibility turns on one number: five years of continuous service with the same employer. Resign at four years and eleven months and, on the plain reading of the Act, nothing is payable. The threshold is unforgiving in a way that surprises people, and it applies to resignation, retirement, retrenchment and the end of a fixed term alike.
There is one clear exception, written into the Act itself. Where employment ends because of the employee's death or permanent disablement, the five year requirement is waived entirely and gratuity is payable however short the service was. In the case of death the amount goes to the nominee registered on Form F, or to the legal heirs where no nomination exists, which is a good reason to check that the form on your file is current.
The genuinely contested part is what counts as a completed fifth year. Section 2A defines continuous service, and treats an employee as having served a full year where they have actually worked 240 days in that year, or 190 days in an establishment working fewer than six days a week. Several High Courts, the Madras High Court most often cited among them, have read that to mean four years and 240 days in the fifth year completes the five year requirement. Other benches have disagreed, the Supreme Court has not settled it, and employers apply it inconsistently. This calculator therefore does not treat four years and 240 days as an entitlement: where your service falls in that band it shows an indicative figure, labels it clearly as resting on a contested reading, and tells you to confirm with your employer or the regional Controlling Authority. An indicative number you can check is useful, while a confident number that might be wrong is not. The Act's own text is published by the Ministry of Labour and Employment and is worth reading directly if you are near this threshold.
Gratuity is exempt from income tax under Section 10(10), but the size of the exemption depends on who employs you, and this is where the biggest misconception on the topic lives.
Before the split, one distinction is worth pinning down, because ₹20,00,000 appears twice on this page doing two different jobs. The CEILING in the Payment of Gratuity Act caps what a single employer is obliged to pay you for that employment, and it resets when you change jobs: work twenty five years somewhere, take the capped amount, then work twenty five years elsewhere, and the second employer's obligation is capped at a fresh ₹20,00,000. The EXEMPTION under Section 10(10) does not reset. It is a lifetime aggregate across every employer and every year, so across that same career only ₹20,00,000 of gratuity is ever tax-free in total and the rest is taxed as salary in the year it is received. Treating the exemption as per-employer, or the ceiling as lifetime, are both common errors and they push the number in opposite directions.
Exempt up to ₹20,00,000, being the lowest of the statutory ceiling, the formula amount and the gratuity actually received.
The EXEMPTION is a lifetime aggregate across every employer and every year. Claim ₹8,00,000 at one job and only ₹12,00,000 of exemption is left for the rest of your career.
The Act's CEILING is a different thing and resets: it caps what each employer must pay you for that employment, not what you may receive in a lifetime.
Anything an employer pays above the ceiling voluntarily is taxable as salary income in the year you receive it.
Fully exempt from income tax, with no upper limit at all.
Retirement and death gratuity for government employees is calculated on a different basis tied to the pay commission rules, not the 15 by 26 formula on this page.
This calculator is built for the private sector reading of the Act, so government employees should treat it as indicative only.
Because gratuity arrives as a lump sum in a single financial year, a large payout can push you into a higher slab even after the exemption, particularly where it lands alongside leave encashment and a notice period payout in the same settlement. If your gratuity is close to or above the ceiling it is worth modelling the whole year with the income tax calculator, or comparing systems with the old versus new tax regime calculator before you choose a leaving date. For the tax on your ordinary salary in the same year, the post-tax salary calculator is the quicker route.
Gratuity becomes payable the moment your employment ends through retirement, resignation, retrenchment, death or disablement. The Act gives the employer thirty days from that date to pay it, and where payment is late the employer owes simple interest on the amount for the period of delay. Withholding gratuity without lawful cause is an offence under the Act, not merely a contractual dispute.
The mechanics are straightforward. You apply on Form I within thirty days of the amount falling due, though a late application does not by itself defeat a valid claim. The employer must acknowledge it on Form L with the amount and a payment date, or reject it on Form M with reasons. Where an employer refuses or simply goes quiet, the claim goes to the Controlling Authority appointed under the Act for your area, whose office sits within the labour department, and there is no fee to file.
Two practical points worth knowing. Employers are required to insure their gratuity liability or maintain an approved fund, so the money is generally not dependent on the company's cash position at the moment you leave. And gratuity can only be forfeited in narrow circumstances set out in the Act, essentially where the employee's services were terminated for wilful damage, riotous conduct or an offence involving moral turpitude committed during employment, and even then only to the extent of the loss caused. A general disagreement about your notice period or your handover is not a lawful basis for withholding it.
The short version, before the detail: this is a statutory formula engine. It knows the Act, it does not know your service record, and it cannot see the settlement sheet your employer will actually issue. The notes below name every point where those three could disagree.
Where service falls between four years eight months and five years, the tool computes a figure at five effective years and labels it indicative. That reflects the Section 2A continuous service argument accepted by several High Courts, which is a real and frequently successful claim, not a settled entitlement. The calculator will not tell you that you are owed the money, because on the current state of the law nobody can tell you that with certainty. Confirm with your employer or the Controlling Authority for your area.
For employers outside the Act the tool divides by thirty rather than twenty six and applies no six month round up, which is the conventional basis for non-covered employees. But gratuity in that situation is contractual rather than statutory, so your appointment letter or your company policy governs and may be more generous. The Act's own basis also uses the average of the last ten months' salary rather than the final month, so where those differ, enter the average for a closer estimate.
Central and state government employees are covered by pay commission and pension rules rather than the 15 by 26 formula, with retirement gratuity computed on a half month of emoluments per six monthly period of service, subject to its own ceiling. This page does not implement that. The tax treatment is also different, being unlimited rather than capped at ₹20,00,000, and that difference is stated in the tax section above.
The formula amount is rounded to whole rupees once, at the end, using the ordinary half up convention. The Act does not prescribe a rounding method, so a settlement sheet may differ from this page by a rupee. It should never differ by more than that, and if it does, the disagreement is about your effective years or your Basic plus DA rather than about arithmetic.
The ceiling moved from ₹10,00,000 to ₹20,00,000 in March 2018 and can move again by notification. The four Labour Codes, including the Code on Social Security, have been passed but their gratuity provisions are not fully in force in the form finally notified, and they would change the treatment of fixed term employees in particular. Verify the position before acting on a number, and for a decision with real money behind it a chartered accountant or an employment lawyer is worth the fee.
The people who get the most from this page are the ones deciding when to leave rather than the ones who have already gone. Somebody four years and seven months in, working out that staying five more months turns nothing into a full payout. Somebody ten years and five months in, discovering that one more month of service rounds the part year up and adds a whole year to the formula. A retiring employee checking the figure HR has quoted before signing the full and final settlement. A nominee working out what is owed after a death in service, where the five year rule does not apply at all. An HR team sanity-checking a settlement sheet before it goes out. If your question is about the money that arrives every month rather than the lump sum at the end, the take-home salary calculator and the provident fund calculator are the better pages, and people leaving with unused leave on the books should also run the leave encashment calculator, since both amounts usually land in the same final settlement. Everything sits in the wider set of salary calculators for India.
Gratuity equals your last drawn monthly Basic plus Dearness Allowance, multiplied by 15, multiplied by your effective years of service, divided by 26. The 15 is days of wages awarded per completed year and the 26 is working days in a month, being 30 less the four Sundays. Only Basic and DA count, never gross salary. On a last drawn Basic plus DA of ₹50,000 with 10 completed years, that is ₹50,000 times 15 times 10 divided by 26, which comes to ₹2,88,462.
Five years of continuous service with the same employer. Below that, on the plain reading of the Act, nothing is payable, and the rule applies equally to resignation, retirement and retrenchment. The single written exception is where employment ends through the employee's death or permanent disablement, in which case gratuity is payable however short the service was and goes to the nominee on Form F.
It is arguable rather than certain. Section 2A of the Act treats an employee who has actually worked 240 days in a year as having completed that year of continuous service, and several High Courts have read that to mean four years plus 240 days in the fifth year qualifies. Other benches disagree and the Supreme Court has not settled it, so employers apply it inconsistently. This calculator shows an indicative figure in that band and labels it as contested rather than telling you it is owed. Raise it with your employer, and take it to the Controlling Authority for your area if they refuse.
A part year of six months or more is rounded up to a full year, and a part year under six months is dropped entirely. Ten years and seven months counts as eleven years. Ten years and five months counts as ten years flat, and those five months earn nothing. Exactly six months rounds up, because the threshold is met at six rather than passed. One rounded year is worth your Basic plus DA times 15 divided by 26, which is ₹28,846 on a ₹50,000 Basic plus DA.
On Basic Salary plus Dearness Allowance only. HRA, conveyance allowance, special allowance, bonus and reimbursements are all excluded, which is the same base used for provident fund. This matters when comparing offers: two packages with identical gross pay produce different gratuity if one weights Basic lower, and a low Basic quietly reduces both your gratuity and your EPF for as long as you stay.
Yes. The statutory ceiling of ₹20,00,000 set by the 2018 amendment remains in force for FY 2026-27, and the Section 10(10) income tax exemption for employees covered by the Act is capped at the same ₹20,00,000. The 15 by 26 formula and the five year qualifying period are unchanged. The gratuity provisions in the Code on Social Security are not fully in force in their final notified form, so the Payment of Gratuity Act, 1972 continues to govern.
₹20,00,000, raised from ₹10,00,000 in March 2018. Where the formula produces more, as it does on a ₹1,50,000 Basic plus DA after 26 years, the payable figure is limited to ₹20,00,000, and anything above that is at the employer's discretion. Note that this ceiling applies PER EMPLOYMENT and resets when you change jobs: a second employer's obligation is capped at a fresh ₹20,00,000. The income tax exemption behaves differently and does not reset, which is covered in the next answer.
For private sector employees covered by the Act it is exempt up to ₹20,00,000 under Section 10(10), taking the lowest of the ceiling, the formula amount and the sum actually received. That exemption, unlike the Act's ceiling, is a lifetime aggregate: it runs across every employer and every year of your career, so claiming ₹8,00,000 at one job leaves only ₹12,00,000 of exemption for all later ones, and you must disclose exemption already claimed when computing the current year's. Central and state government employees receive full exemption with no upper limit. Because it arrives as a lump sum in one financial year, a large payout alongside leave encashment can still move you into a higher slab.
Within 30 days of the amount falling due, which is your last working day. Beyond 30 days the employer owes simple interest for the delay. You apply on Form I, the employer must respond on Form L with an amount and a date or reject on Form M with reasons, and a refusal or silence goes to the Controlling Authority appointed under the Act for your area, at no fee. Employers must also insure the liability or maintain an approved fund, so payment usually does not depend on company cash flow.
The Act applies to establishments with 10 or more employees. Below that, gratuity is contractual rather than statutory, and the conventional basis divides by 30 instead of 26 and gives no six month round up, so only completed years count. Your appointment letter or company policy governs and may be more generous than the conventional formula. That basis also uses the average salary of your last 10 months rather than the final month, so enter the average for a closer estimate.
It usually appears in your CTC as a provision of 4.81% of Basic plus DA, which is simply 15 divided by 26 divided by 12. You contribute nothing yourself: unlike provident fund, no gratuity deduction comes out of your salary. It is an accrual the employer sets aside, and it only becomes real money if you complete five years, which is why a CTC figure quoting gratuity overstates what a short tenure will actually deliver.
Your last drawn Basic plus DA and your years and months of service in, the full formula out, with the rounding rule, the statutory ceiling and the tax-free amount all shown. Free, private, and nothing you type is stored.
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