Gratuity Calculator

Salary

See how much gratuity you are entitled to when you leave a job, based on your last drawn salary and completed years of service.

Free · No sign-up · Private5 min readUpdated 26 July 2026

In short: The Gratuity Calculator is a free online tool that lets you estimate the gratuity payable when you leave a job after years of service — instantly, with charts, a worked example and the exact formula.

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Your inputs

Results

Gratuity payable

₹3,46,154

Years of service

Eligible

Last monthly salary

₹60,000

Basic + DA

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Gratuity by years of service

How your gratuity entitlement grows with each year worked.

Year-wise gratuity

Year-wise gratuity
Year	Gratuity	Eligible
1	₹34,615	No
2	₹69,231	No
3	₹1,03,846	No
4	₹1,38,462	No
5	₹1,73,077	Yes
6	₹2,07,692	Yes
7	₹2,42,308	Yes
8	₹2,76,923	Yes
9	₹3,11,538	Yes
10	₹3,46,154	Yes

Gratuity is payable only after 5 years of continuous service.

Formula

Gratuity = (15 ÷ 26) × Last monthly salary × Years of service

15 ÷ 26: 15 days of wages out of a 26-day working month
Last monthly salary: Basic salary plus dearness allowance
Years of service: Completed years with the employer

Step-by-step calculation

Worked with the default values.

1
Formula
(15 ÷ 26) × last monthly salary × years
2
Daily-wage factor
15 ÷ 26
= 0.5769
3
Gratuity payable
0.5769 × ₹60,000 × 10
= ₹3,46,154

How it works

Gratuity rewards long service and is paid on resignation, retirement or superannuation.
The formula treats a month as 26 working days and grants 15 days’ wages per completed year.
You are eligible only after 5 years of continuous service (waived on death or disablement).

Examples

Last salary ₹60,000/month, 10 years of service

Gratuity ≈ (15/26) × 60,000 × 10 = about ₹3.46 lakh.

Understanding the Gratuity Calculator

What gratuity is and why it exists

Gratuity is a lump-sum reward for long service, paid by your employer when you leave after several years. It is governed by the Payment of Gratuity Act, 1972, which applies to factories, mines, shops and establishments employing 10 or more people. The idea is simple: the longer you stay, the larger the thank-you when you eventually move on, retire or in the unfortunate event of death or disablement.

Crucially, gratuity costs you nothing directly — it is funded entirely by the employer. Many companies show it as a line inside your CTC, but the statutory entitlement is calculated by law, not by what appears on your offer letter.

How the amount is calculated

For covered establishments the formula is:

Gratuity = (15 ÷ 26) × last drawn monthly salary × years of service

Here the month is treated as 26 working days and you earn 15 days’ wages for each completed year. The salary means basic pay plus dearness allowance only — HRA, bonuses and other allowances are excluded. A part-year is rounded: more than 6 months in the final year counts as a full year, while 6 months or less is dropped.

So an employee earning ₹60,000 basic-plus-DA who completes 10 years receives roughly (15 ÷ 26) × 60,000 × 10, or about ₹3.46 lakh.

Eligibility and the tax angle

You generally need 5 years of continuous service to qualify, though this condition is waived if service ends due to death or disablement. Gratuity is tax-free up to ₹20 lakh for private-sector employees covered by the Act across your entire career; anything above that ceiling is taxable as salary.

Payable within 30 days of becoming due, with interest if delayed.
Forfeited only for dismissal on proven misconduct causing damage.
The ₹20 lakh exemption is a lifetime limit, not a per-employer one.

Because eligibility hinges on that five-year threshold and the final-year rounding rule, planning your exit date thoughtfully can mean the difference between forfeiting the benefit entirely and picking up an extra qualifying year.

Pros

Rewards loyalty with a lump sum that grows with every completed year of service.
Tax-free up to ₹20 lakh for employees covered by the Act, making it highly efficient.
Funded entirely by the employer — no deduction from your own salary.
Payable on resignation, retirement, death or disablement, giving broad protection.
Legally enforceable, with interest due if the employer pays late.

Cons

Requires 5 years of continuous service before you become eligible (except on death or disablement).
Only basic salary plus DA counts, so a large allowance-heavy CTC yields modest gratuity.
Capped at ₹20 lakh, limiting the benefit for very long or high-salary careers.
Frequent job changes before completing 5 years mean you forfeit the benefit each time.

Tips

1Try to complete at least 5 continuous years with an employer before switching to lock in eligibility.
2Remember service beyond 6 months in the final year rounds up to a full year — timing your exit can add a year.
3Check whether your CTC counts gratuity as a provision; if so, it is already earmarked for you.
4Keep salary slips and appointment letters to substantiate your last drawn basic plus DA if disputed.
5If gratuity is delayed beyond 30 days, claim the statutory interest you are owed.

Frequently asked questions

Everything you need to know about the Gratuity Calculator.

Who is eligible for gratuity?

Employees who complete at least 5 years of continuous service with an employer covered by the Payment of Gratuity Act. The 5-year rule is waived if service ends due to death or disablement.

Is gratuity taxable?

Gratuity is exempt up to ₹20 lakh for private-sector employees covered by the Act. Any amount above that limit is taxable as salary income.

What salary is used in the formula?

The last drawn monthly salary — meaning basic salary plus dearness allowance — is used, not the full CTC. Allowances like HRA, conveyance and bonuses are excluded from the gratuity calculation.

How is a part-year of service rounded?

For employers covered by the Act, service beyond 6 months in the final year is rounded up to a full year, while 6 months or less is ignored. So 10 years and 7 months counts as 11 years, but 10 years and 4 months counts as 10.

What is the maximum gratuity payable?

Gratuity under the Payment of Gratuity Act is capped at ₹20 lakh across your career, even if the formula produces a higher figure. Amounts above this ceiling are at the employer’s discretion and are taxable.

Are seasonal or piece-rated workers treated differently?

For establishments that work seasonally, gratuity is 7 days’ wages for each season instead of 15/26. For piece-rated employees, the average of the last three months’ wages is used as the base.

When must the employer pay gratuity?

Gratuity is payable within 30 days of it becoming due, typically when you leave. If the employer delays beyond 30 days, they must pay simple interest on the amount for the delayed period.

Does gratuity apply if I resign?

Yes. Gratuity is payable on resignation, retirement, superannuation, death or disablement, as long as you have completed the qualifying period of continuous service. Only dismissal for proven misconduct causing damage can lead to forfeiture.

Is my company covered by the Gratuity Act?

The Act applies to factories, mines, shops and establishments employing 10 or more people. Once covered, an establishment remains covered even if headcount later falls below 10.

Methodology & sources

How the Gratuity Calculator is calculated, and where the underlying rules come from.

How we calculate it

Every result is produced by a single, shared and tested financial-formula library used across the whole site — so the maths is consistent from one calculator to the next. Figures are estimates based on the inputs you enter and standard assumptions (such as regular compounding and constant rates); real-world outcomes vary with taxes, fees and changing rates. All calculations run in your browser — nothing you type is stored or sent to a server.

Sources & references

Editorial policy & disclaimer. FinCalcHub provides free educational tools and estimates — not personalised financial, tax or investment advice. Verify important decisions with a qualified professional. Read our editorial approach, disclaimer and privacy policy.

Reviewed by Dhirendra Bisht, Founder & Lead Engineer, FinCalcHub — last reviewed 26 July 2026.