Gratuity Calculator
Estimate your statutory gratuity — (15/26) × last drawn Basic+DA × years of service, with the 5-year eligibility rule and ₹20 lakh cap applied.
What is gratuity?
Gratuity is a lump sum your employer must pay you under the Payment of Gratuity Act, 1972 when you leave after five or more years of continuous service — on resignation, retirement or superannuation. The statutory formula pays fifteen days of wages for every completed year of service, computed on your last drawn Basic + DA using a 26-working-day month.
This calculator applies the full statutory rulebook for covered establishments: the five-year eligibility gate, the six-month rounding rule for part years, and the ₹20,00,000 cap on the amount payable.
The gratuity formula
Gratuity = (15 ÷ 26) × last drawn (Basic + DA) × years of service
- 15 — days of wages credited per completed year of service
- 26 — working days assumed in a month, so one day of wages is monthly salary ÷ 26
- Basic + DA — the last drawn basic salary plus dearness allowance; other allowances do not count
- Years of service — part years of 6 months or more round up to a full year; less than 6 months is dropped
- Cap — the payable amount is limited to ₹20,00,000, and eligibility requires 5 years of actual service
How to use this calculator
- Enter your monthly salary — Basic + DA only, not your full CTC or gross.
- Enter your years of service, adding months for the part year; 6 or more months rounds the year up.
- Read the gratuity payable. The ring chart shows how much headroom remains to the ₹20,00,000 statutory cap.
If service is under 5 years the calculator shows zero — the Act’s eligibility gate uses actual service, so even 4 years 11 months does not qualify.
A worked example
Last drawn Basic + DA of ₹50,000 with 10 years of service:
- Gratuity: (15 ÷ 26) × 50,000 × 10 = ₹2,88,461.54 — about ₹2.88 lakh
- With 10 years 7 months, the year rounds up to 11 and the payout rises to ₹3,17,307.69
The cap in action: ₹2,00,000 Basic + DA over 25 years computes to ₹28,84,615.38 on paper, but the statutory payout is capped at ₹20,00,000.
How gratuity is taxed
Gratuity received by government employees is fully exempt under section 10(10). For employees of establishments covered by the Act, the exemption is the least of the amount actually received, the statutory formula amount, and ₹20,00,000 — a lifetime limit across all employers. Anything above the exempt amount is taxed as salary at your slab.
Both the ₹20,00,000 payment cap and the tax-exemption ceiling are notified by the government — they are current figures and can be revised.
Not under the strict reading this calculator follows: the Act requires 5 years of continuous service, measured on actual service. Some High Court rulings have accepted 4 years and 240 days, but that position is not applied uniformly — check with your employer. The 5-year gate is waived entirely on death or disablement.
Only your last drawn basic salary plus dearness allowance. HRA, bonuses, reimbursements and other CTC components are excluded — which is why the gratuity on a large CTC can look smaller than expected.
Six months or more rounds up to a full year; under six months is ignored. So 10 years 7 months pays for 11 years, while 5 years 5 months pays for 5. Eligibility, however, always needs 5 years of actual service first.
No — it is the current statutory cap under the Act (raised from ₹10,00,000 in 2018) and the government can revise it again. This calculator applies the ₹20,00,000 figure in force for FY 2025-26.
Up to ₹20,00,000 (lifetime, and limited to the statutory formula amount) is exempt under section 10(10) for employees covered by the Act; government employees are fully exempt. Any excess is added to your salary income and taxed at slab.
A different exemption formula applies — half a month’s average salary (last 10 months) per completed year, ignoring part years. This calculator computes the covered-establishment formula, which is the common case for companies with 10 or more employees.