Calculate gratuity amount as per Gratuity Act
Built & maintained by Pappu Venkata Subbi Reddy, founder of Clacify · Updated July 2026 · Formulas verified against official Indian government sources
The Gratuity Calculator estimates the lump sum your employer owes you for long service under the Payment of Gratuity Act, 1972. Gratuity is a reward for staying with an organisation, and it becomes payable once you complete five years of continuous service and then leave, retire, or resign. Enter your last drawn salary (basic + dearness allowance) and your years of service, and the calculator applies the statutory formula to show your gratuity amount — plus how much of it is tax-free.
For employees covered by the Payment of Gratuity Act, gratuity = (15 × last drawn salary × completed years of service) ÷ 26, where "salary" is basic + dearness allowance and 26 represents working days in a month. Service beyond six months in the final year is rounded up to a full year. The amount received is tax-free up to a lifetime limit of ₹20 lakh for non-government employees (fully exempt for government employees); anything above that is taxable as salary income. Five years of continuous service is the eligibility threshold, waived only in cases of death or disablement.
| Years of service | Gratuity amount |
|---|---|
| 5 years | ₹1,44,231 |
| 10 years | ₹2,88,462 |
| 15 years | ₹4,32,692 |
| 20 years | ₹5,76,923 |
| 25 years | ₹7,21,154 |
| 30 years | ₹8,65,385 |
Formula: (15 × ₹50,000 × years) ÷ 26. Gratuity scales with your final salary, so a promotion late in your career lifts the whole payout. Tax-free up to ₹20 lakh across your lifetime.
Gratuity is payable only after five years of continuous service with the same employer — which is why the five-year mark is such a common point to reconsider a job change. The one exception: if service ends due to death or disablement, the five-year condition is waived. A widely litigated nuance is whether 4 years and 240+ days counts as five years; some courts have allowed it, but employers vary, so don't assume it.
For private-sector employees covered by the Act, gratuity is exempt from tax up to a lifetime ceiling of ₹20 lakh (raised from ₹10 lakh in 2018). This limit is cumulative across all the jobs of your career, not per employer. Government employees receive gratuity fully tax-free. Anything above your exempt limit is added to your taxable income in the year you receive it.
Because the formula multiplies your last drawn basic + DA, gratuity is disproportionately shaped by your final salary rather than your average over the years. Someone who is promoted in their last year sees their entire gratuity — covering all prior years — calculated at the higher figure. This is also why negotiating a higher basic (rather than allowances) late in your tenure quietly increases both your gratuity and your PF.
Gratuity = (Last Basic Salary + DA) × 15/26 × Number of Completed Years. The 15/26 factor represents 15 days out of 26 working days per month. Example: Last basic + DA = ₹50,000/month, 10 years service → Gratuity = 50,000 × 15/26 × 10 = ₹2,88,462.
Under the Payment of Gratuity Act, 1972, an employee is eligible if they have completed 5 or more years of continuous service with one employer (4 years and 240 days is considered 5 years in case of death or disability). It applies to all companies with 10 or more employees. Gratuity up to ₹20 lakh is completely tax-free.