Gratuity Calculator — How Much Gratuity Will You Get?

What is Gratuity?

Gratuity (ग्रेच्युटी) is a lump-sum payment an employer gives an employee as a reward for long, continuous service. It is paid when you leave — on retirement, resignation, termination, or on death or disablement — and is calculated from your last salary and the number of years you worked. For many employees it is the second-largest payout after the Provident Fund when they change jobs or retire.

In India, gratuity was governed for decades by the Payment of Gratuity Act, 1972. Its provisions are now part of the Code on Social Security, 2020, which the government brought into force on 21 November 2025; central rules notified in 2026 fill in details such as fixed-term employees. The basic formula is unchanged. This free gratuity calculator applies it, including the rounding rule many people miss, checks whether you are eligible and shows how much of the amount is tax-free.

Key Features

• Exact formula — 15/26 for covered employers, 15/30 for others.
• Rounding rule — more than six months in the final year counts as a full year.
• Eligibility check — 5 years for regular staff, 1 year for fixed-term employees.
• Tax split — tax-free and taxable parts, with the government-employee exemption.
• Clear explanation of the formula used for your numbers.
• Private — salary stays in your browser.

How to Use the Gratuity Calculator

1. Enter your last drawn monthly basic salary plus dearness allowance.
2. Enter your completed years and any extra months of service.
3. Choose whether your employer is covered by the gratuity law (usually 10 or more employees).
4. Pick private, fixed-term or government employee.
5. Read the gratuity, the service counted, the formula and the tax-free amount.

The Gratuity Formula Explained

Gratuity = Last drawn (basic + DA) × 15 ÷ 26 × Years of service

• 15 — you earn 15 days' wages for every year of service.
• 26 — the number of working days in a month assumed by the law (a month minus four Sundays).
• Years of service — completed years, plus one more if the last part-year is longer than six months.

Worked example: Priya's last basic + DA is ₹50,000 and she worked 7 years 8 months. Because 8 months is more than six, her service counts as 8 years. Gratuity = 50,000 × 15 ÷ 26 × 8 = ₹2,30,769. Had she left after 7 years 5 months, it would count as 7 years: ₹2,01,923.

For employers not covered by the law, gratuity is often paid as half a month's salary per completed year: 50,000 × 15 ÷ 30 × 7 = ₹1,75,000 — and part-years do not round up.

Gratuity Ready Reckoner (basic + DA, covered employer)

Who Is Eligible for Gratuity?

• Regular employees: at least 5 years of continuous service with the same employer.
• Fixed-term employees: entitled on the expiry of their contract after at least 1 year of service, under the Code on Social Security and the central rules notified in 2026.
• Death or disablement: no minimum service; gratuity is paid to the employee or nominee.
• Employers covered: establishments with 10 or more employees on any day in the preceding twelve months. Once covered, they stay covered even if headcount falls.

Courts have held that “continuous service” includes periods of authorised leave, and many decisions treat 4 years and 240 working days in the fifth year as completing 5 years for eligibility. If your case is borderline, check with your HR or a labour lawyer.

Is Gratuity Taxable?

The ₹20 lakh limit applies across your whole career, not per employer. Any amount above the exemption is added to your income and taxed at your slab rate; you may claim relief for arrears-like payments where applicable. Gratuity received by a nominee after the employee's death is not taxable as salary.

When and How Gratuity Is Paid

1. Submit the gratuity claim form to your employer when you leave (many employers process it automatically).
2. The employer must pay within 30 days of the amount becoming payable.
3. Late payment attracts simple interest at the rate notified by the government.
4. If the employer disputes or refuses, you can approach the controlling authority under the law.

Gratuity can be forfeited only in narrow cases, such as termination for wilful damage to the employer's property, or for riotous, disorderly or violent conduct, or for an offence involving moral turpitude.

What Changed with the New Labour Codes?

The four labour codes replaced 29 older labour laws. For gratuity, the Code on Social Security, 2020 keeps the familiar 15-days-per-year formula and the 5-year rule for regular employees, but brings two notable changes. First, fixed-term employees are entitled to gratuity on completing their contract, with central rules notified in May 2026 setting a minimum of one year of service — earlier, a fixed-term worker leaving before five years usually got nothing. Second, the codes use a common definition of “wages”, which many experts expect to raise the salary base for benefits such as gratuity where allowances form a large share of pay. How each employer applies the new wage definition can differ, so check your payslip and HR policy; this calculator uses the basic + DA figure you enter.

Gratuity vs Provident Fund

• Who pays: gratuity is paid entirely by the employer; EPF has both employee and employer contributions.
• When: gratuity is a one-time payment when you leave after the minimum service; EPF builds every month and earns yearly interest.
• Amount: gratuity depends on your last salary and years worked; EPF depends on every month's contributions and interest.
• Tax: gratuity is tax-free up to ₹20 lakh for private employees; EPF withdrawals are tax-free after 5 years of continuous service.

Use our EPF Calculator alongside this one to see your total retirement or job-change payout.

Smart Tips

• Time your exit. If you are at 4 years 7 months or 9 years 7 months, waiting until the part-year passes six months can add a full year's gratuity under covered employers.
• Know your basic. Gratuity uses basic + DA only; a salary structure with a low basic means lower gratuity.
• Track the lifetime limit. Keep records of tax-free gratuity received from earlier employers.
• Check employer gratuity insurance. Many employers fund gratuity through a group gratuity scheme; ask HR for your nominee details.

Common Mistakes to Avoid

• Using gross or CTC salary instead of basic + DA.
• Ignoring the rounding rule — or applying it to non-covered employers.
• Assuming the 5-year rule applies to fixed-term contracts — they need one year.
• Treating the ₹20 lakh exemption as per job.
• Forgetting to update your nominee — keep the gratuity nomination form current so your family can claim easily.

Quick Glossary

• Basic salary: the fixed core part of your pay.
• DA: dearness allowance, paid mainly in government and some private jobs.
• Continuous service: uninterrupted employment, including authorised leave.
• Fixed-term employment: a contract for a set period, with benefits like permanent staff.
• Controlling authority: the official who decides gratuity disputes.

Why Use This Gratuity Calculator?

It applies the exact formula and rounding rule, covers fixed-term and government employees, shows the tax-free amount and explains every step — so you know what to expect before you sign your exit papers. Share the result with your HR team if their figure differs, and ask which salary and service period they used.

Gratuity Calculator — Key Facts

Frequently Asked Questions

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