Salary
Link copied!
Gratuity Calculator
Estimate the gratuity payable to you based on tenure and last drawn pay. Adjust any input below and your results update instantly.
Understanding gratuity
The concept, the motivation, and what to watch out for.
A statutory thank-you for long service — paid once, on your way out
Gratuity is a lump sum your employer owes you for staying 5+ years, calculated as 15 days' wages for every year served — but it only ever pays out when you leave, retire, or (in a specific new case) finish a fixed-term contract, never as part of your regular salary.
This calculator applies the exact statutory formula, including the two rules most people miss: how partial years round, and the ₹20 lakh ceiling that caps both what's legally payable and what's tax-free.
The divisor depends on whether your employer is covered
Most companies with 10+ employees are covered under the Payment of Gratuity Act and use a divisor of 26 — smaller, exempt establishments that still choose to pay gratuity typically use 30 instead.
Partial years round differently depending on coverage
Covered employees get any 6+ months in their final year rounded up to a full year; non-covered employees use the exact fractional years instead.
How this calculator helps
Enter your last drawn salary and service length — see your exact gratuity, how much of it is tax-free, and what's taxable at your slab rate.
Calculate your gratuity
Fill in the starred fields on the left — your results update instantly on the right.
Your details
Covered under the Payment of Gratuity Act
Off uses a 30-day divisor and exact (unrounded) years instead.
Government employee
On removes the ₹20L cap on the tax-free portion.
e.g. ₹50,000 a month
e.g. 7 years
e.g. 0 extra months
These are example numbers. Edit any input on the left to see your own.
Your gratuity amount
₹2.02 L
7 eligible years
Tax-exempt
₹2.02 L
Taxable
₹0
₹50,000 × 15 × 7 years ÷ 26 = ₹2.02 L.
From formula to final amount
How the raw formula amount narrows down to what you actually receive, tax-free.
ComponentAmountStatus
Formula amount₹2.02 L
Before any cap
100% of the formula amount
Final amount payable₹2.02 L
Capped at ₹20L
100% of the formula amount
Tax-exempt portion₹2.02 L
Exempt
100% of the formula amount
Taxable portion₹0
Taxed at slab rate
0% of the formula amount
Compare scenarios
See how Act coverage or employee type would change your gratuity.
Your plan
Covered under the Act
₹2.02 L
Gratuity amount
Baseline
Not covered instead
Same salary & tenure
₹1.75 L
Gratuity amount
-₹26,923
Government employee instead
Tax-exempt portion changes
₹2.02 L
Gratuity amount
No change
Worked example, using your numbers
A step-by-step walkthrough of how your gratuity is calculated.
Step 1 · Eligible years
7y 0m of service rounds to
7 years
Step 2 · Formula amount
15 days’ wages per year, using a divisor of 26
₹2.02 L
Step 3 · Final amount
After the ₹20L statutory ceiling
₹2.02 L
✓
Of your ₹2.02 L gratuity, ₹2.02 L is tax-free.
Personalised insights
What your numbers reveal, and what changing them would do.
7 years counted toward your gratuity
7 years and 0 months of raw service round to 7 eligible years under this formula.
You're comfortably under the statutory ceiling
The formula amount of ₹2.02 L is well within the ₹20 lakh statutory and tax-exemption ceiling.
Being covered nets you ₹26,923 more
The other formula (30-day divisor, exact years) would work out to ₹1.75 L.
₹0 of this is taxable at your slab rate
The entire ₹2.02 L is tax-free under Section 10(10).
How this is calculated
Every step of the math behind your result, shown in the open.
Gratuity, from the statutory formula
Salary = last drawn Basic + DA, Years = your eligible years of service, d = 26 if covered under the Act or 30 if not
15 days' wages for every year of service, using whichever divisor applies to your employer.
Example: ₹50,000 × 15 × 7 ÷ 26 → ₹2.02 L
How years of service round
m = extra months beyond your completed years, Years_whole = your completed full years of service
Only employees covered under the Act get this rounding benefit — non-covered employees use the exact fractional years.
Example: 7y 0m → 7 eligible years (rounded)
What's actually payable and tax-free
Final = what you receive after the ₹20L cap (if covered under the Act), Exempt = the tax-free portion (unlimited for government employees), Taxable = the remainder taxed at your slab rate
The ₹20 lakh ceiling caps two different things depending on your employer type — the payout itself if covered, or just the tax-free portion if not.
Example: min(₹2.02 L, ₹20L) → ₹2.02 L final, ₹0 taxable
Assumptions
- Eligibility is checked against your exact (unrounded) years of service, even though the payout formula itself may round in your favour if you're covered under the Act.
- Death or disablement waives the 5-year eligibility rule entirely — not modeled here, since it isn't a scenario this calculator's inputs describe.
- Voluntary Dearness Allowance components beyond Basic + DA (special allowances, bonuses) aren't part of "last drawn salary" for this formula.
- Figures are indicative — not financial or legal advice.
Did you know?
A few facts behind how gratuity is calculated in India.
₹20L
The ceiling hasn't moved since 2018
The ₹20 lakh statutory and tax-exemption limit was raised from ₹10 lakh on 29 March 2018 — the longest-standing figure of any gratuity rule, unchanged since.
15/26
The formula assumes a 26-day working month
Most calendar months have around 26 working days once Sundays are excluded — that's where the Act's divisor comes from, not an arbitrary round number.
1 year
Fixed-term contract workers no longer wait 5 years
The Code on Social Security, 2020 (effective November 2025) gives fixed-term contract employees pro-rata gratuity after just 1 year — a major carve-out from the standard 5-year rule.
6 months
One extra day can be worth a full year
Leaving at 7 years 6 months instead of 7 years 5 months rounds your service up a full year for the payout formula — a meaningful difference at the margin.
0
Death and disablement waive the 5-year rule entirely
The only two circumstances where gratuity is payable regardless of tenure — even to an employee with just months of service.
Frequently asked questions
Straight answers to the questions we hear most about gratuity.
Am I even eligible for gratuity?
Generally, you need 5+ years of continuous service with the same employer. Since November 2025, fixed-term contract employees qualify after just 1 year instead — and the 5-year rule is waived entirely if employment ends due to death or disablement.
Why does my company use 30 instead of 26 in the formula?
Companies with fewer than 10 employees aren't covered under the Payment of Gratuity Act — if they still choose to pay gratuity voluntarily, they typically use a 30-day divisor instead of the Act's 26-day one, which works out to a smaller amount for the same salary and tenure.
How exactly do partial years get rounded?
If you're covered under the Act, any 6 or more months in your final year of service round up to a full additional year — 7 years 8 months becomes 8 years for the formula. Under 6 months rounds down instead. Non-covered employees don't get this rounding at all; their formula uses the exact fractional years.
Is my gratuity fully tax-free?
Only up to ₹20 lakh — the least of the actual amount received, ₹20 lakh, or the formula amount is exempt under Section 10(10). This ₹20 lakh limit is a lifetime cap across every employer you've ever received gratuity from, not a fresh limit each time. Government employees get an unlimited exemption.
Can my employer pay more than the ₹20 lakh statutory ceiling?
Only if you're not covered under the Act — Section 4(3) legally caps what's payable under the Act itself at ₹20 lakh for covered employees. A generous employer can still pay more as an ex-gratia amount, but that excess isn't "gratuity" under the Act and is fully taxable.
Does gratuity come out of my monthly salary or CTC?
No — it's a separate lump sum your employer is legally obligated to pay on exit, funded either from a dedicated gratuity trust or the company's own funds. See the CTC to In-hand Calculator for how it's typically provisioned into your CTC without ever touching your monthly payslip.
Related calculators
Other tools worth checking alongside this one.
CSalary
CTC to In-hand Calculator
Convert your annual CTC into an estimated monthly take-home salary.
Try it
ITaxation
Income Tax Calculator
Compare your tax outgo under the old and new regimes instantly.
Try it
ESavings
EPF Calculator
Estimate your Employee Provident Fund corpus at retirement age.
Try it
TSalary
Take-home Pay Calculator
Break down every deduction between your gross pay and net salary.
Try it
Learn more
Articles to go deeper on the ideas behind this calculator.
Fundamentals
Why gratuity isn't part of your monthly salary
The 5-year vesting rule, and what happens if you leave early.
4 min read
Fundamentals
Gratuity's ₹20 lakh cap, explained
Why the same figure caps both the payout and the tax exemption — for different reasons.
5 min read
Strategy
What changed for fixed-term contract workers in 2025
The new 1-year gratuity eligibility rule, and who it actually applies to.
4 min read