Gratuity Calculator
Work out gratuity under the Payment of Gratuity Act, 1972 from your last drawn basic plus DA and your length of service.
Basic pay plus dearness allowance only — not your full CTC.
The Act applies to establishments with 10 or more employees — that covers most organisations. Coverage changes the divisor from 26 to 30.
Gratuity payable
₹2,30,769
- Tenure counted
- 8 years
- Formula
- 15 × salary × 8 ÷ 26
- Statutory ceiling
- ₹20,00,000
Indicative only. Your actual entitlement depends on your terms of employment and how continuous service is counted. An employer may always pay more than the statutory minimum.
What the formula actually uses.
Gratuity is a lump sum an employer pays for long service. Where the Payment of Gratuity Act, 1972 applies — broadly, establishments with ten or more employees — the entitlement is (15 × last drawn salary × years of service) ÷ 26. The 15 represents fifteen days of wages for every completed year, and 26 is taken as the number of working days in a month.
The single biggest misunderstanding is what “salary” means. It is your last drawn basic pay plus dearness allowance — not your CTC, and not your take-home. Because basic is often only 40–50% of CTC, the gratuity figure is usually far smaller than employees anticipate.
Length of service matters twice over. You normally need five years of continuous service to qualify at all, and in the final year anything beyond six months rounds up to a full year. So 7 years and 8 months is counted as 8, while 7 years and 4 months stays at 7. Where an employer is outside the Act, the divisor becomes 30 and only fully completed years are counted, which produces a noticeably lower figure.
The statutory ceiling is ₹20,00,000. On the tax side, the exemption for a covered employee is the least of the gratuity actually received, ₹20,00,000, or the amount given by the formula — with any excess taxed as salary.
Frequently asked.
How is gratuity calculated in India?+
For employees covered by the Payment of Gratuity Act, 1972, gratuity is (15 × last drawn salary × years of service) ÷ 26, where salary means basic pay plus dearness allowance. The divisor 26 represents working days in a month. For employees not covered by the Act, the divisor is 30 instead.
What is the gratuity formula for 5 years of service?+
On a last drawn basic plus DA of ₹50,000 and exactly five years of service, gratuity is (15 × 50,000 × 5) ÷ 26, which is about ₹1,44,231. Five years of continuous service is normally the minimum needed to qualify.
Do I get gratuity if I leave before 5 years?+
Generally no — the Act requires five years of continuous service. The exception is where employment ends because of death or disablement, in which case gratuity is payable regardless of how long the employee served. Some courts have also treated 4 years and 240 days as qualifying in certain circumstances.
Is salary for gratuity the full CTC?+
No. Gratuity is computed on last drawn basic pay plus dearness allowance only. Allowances such as HRA, conveyance, bonus and variable pay are excluded, which is why the gratuity figure is usually much lower than people expect from their CTC.
How are part years counted for gratuity?+
Under the Act, if you serve more than six months in your final year, that year is rounded up to a full year — so 7 years and 8 months counts as 8 years. Six months or less is ignored. For employees outside the Act, only fully completed years are usually counted.
What is the maximum gratuity payable?+
The statutory ceiling is ₹20,00,000. Anything computed above that is capped for the purpose of the entitlement under the Act, though an employer is always free to pay more as a contractual or ex-gratia benefit.
Is gratuity taxable in India?+
Gratuity received by government employees is fully exempt. For other employees covered by the Act, the exemption is the least of the actual gratuity received, ₹20,00,000, or the amount computed by the statutory formula — the balance is taxable as salary. Anything an employer pays above the exempt limit is taxed.
When must an employer pay gratuity?+
Gratuity becomes payable on resignation, retirement, superannuation, death or disablement, and the employer is required to pay it within 30 days of it becoming due. Delay beyond that attracts simple interest, and disputes can be taken to the Controlling Authority under the Act.
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