Gratuity Calculator
Calculate gratuity from your joining and leaving dates under the Payment of Gratuity Act formula.
Gratuity is a lump sum your employer pays for continuous service, governed by the Payment of Gratuity Act, 1972. This calculator applies the statutory formula to your joining and leaving dates, checks the five-year eligibility rule, handles the rounding correctly, and shows how much of the result is tax-free.
Service and salary details
Result
Fill in the fields above and your result will appear here.
What the Gratuity Calculator does
The Act applies to establishments with ten or more employees. It entitles you to fifteen days' wages for every completed year of service, calculated on your last drawn basic salary plus dearness allowance — not on gross salary and not on CTC.
Two rules trip people up. The first is eligibility: five years of continuous service, waived only where service ends in death or disablement. The second is rounding: a year of service counts fully once you cross six months into it, so 6 years and 7 months counts as 7 years while 6 years and 5 months counts as 6.
How to use this tool
- Enter your date of joining exactly as it appears on your appointment letter.
- Enter your last working day — the end of your notice period, not the date you resigned.
- Enter your last drawn monthly Basic + DA. If your payslip has no DA component, use basic alone.
- Confirm whether your employer is covered by the Act. Establishments with ten or more employees are, which covers almost all organised employers.
- Read the eligibility line first. If you are within a few months of a rounding threshold, the tool tells you what waiting would add.
Formula and method
Gratuity = (Last drawn Basic + DA) × 15 × Completed years ÷ 26
Completed years: round UP if service in the final year is 6 months or more,
round DOWN if it is less.
Employers outside the Act commonly use ÷ 30 instead of ÷ 26.
The 26 divisor treats a month as twenty-six working days, excluding weekly offs — this is prescribed by the Act and makes the statutory formula slightly more generous than a straight 30-day month.
Worked example
Example: 7 years 4 months of service, Basic + DA of ₹45,000
| Completed years (4 months < 6, rounds down) | 7 years |
| 15 days' wages (45,000 × 15 ÷ 26) | ₹25,962 |
| Gratuity (₹25,962 × 7) | ₹1,81,731 |
| Tax-free (within ₹20,00,000 limit) | Fully exempt |
Staying two more months to reach 7 years and 6 months would round service up to 8 years and add another ₹25,962.
What your result means
The amount is payable within 30 days of it becoming due. Beyond that, the Act provides for simple interest on the delay.
The tax-free portion is capped at ₹20,00,000 as a lifetime aggregate across all employers, not per job. If you have already received exempt gratuity from a previous employer, the remaining headroom is what applies here.
Eligibility is binary and unforgiving. Four years and eleven months of service usually pays nothing, which is why the exact last working day is worth planning around when you are close to the threshold.
Important considerations
- Gratuity is calculated on last drawn Basic + DA only. A salary structure with a low basic reduces gratuity as well as PF, which is one reason the basic percentage in your offer matters.
- Continuous service allows for approved leave, maternity leave and lay-offs. Unauthorised absence can break it — the definition is in Section 2A of the Act.
- Several High Courts have held that 4 years and 240 days counts as five years of continuous service. Employers do not apply this uniformly, so treat it as arguable rather than settled.
- An employer may forfeit gratuity, wholly or partly, where services are terminated for wilful damage, riotous conduct or an offence involving moral turpitude — the grounds are narrow and set out in Section 4(6).
- Where your CTC includes a gratuity provision of about 4.81% of basic, that is an accounting entry against a future liability. If you leave before five years, it is not paid out.
Limitations of this tool
- It calculates gratuity under the statutory formula only. Employers who pay more generously under their own policy, or who use a different divisor, will produce a different figure.
- It does not model gratuity for seasonal establishments or piece-rated employees, both of which have separate rules under the Act, nor the tax treatment of a death gratuity received by a nominee.
Frequently asked questions
Do I get gratuity if I leave after 4 years and 8 months?
Under the plain wording of the Act, no — five years of continuous service is required. Several High Court decisions have read 4 years and 240 days as sufficient, and some employers follow that. It is worth asking, but do not plan a resignation date on the assumption that it will be granted.
Is gratuity calculated on basic or gross salary?
On last drawn Basic + DA only. Using gross or CTC will overstate the amount substantially, since HRA and allowances are excluded.
How much gratuity is tax-free?
For non-government employees covered by the Act, exemption is the least of: the actual gratuity received, ₹20,00,000, or 15 days' wages per completed year. The ₹20,00,000 is a lifetime aggregate across all employers.
When must my employer pay gratuity?
Within 30 days of it becoming payable. If it is delayed beyond that, the Act provides for simple interest. Disputes go to the Controlling Authority appointed under the Act — usually a labour department officer in your district.
Does gratuity apply if I am on a fixed-term contract?
Yes. Fixed-term employees are entitled to gratuity on a pro-rata basis under amendments to the rules, without needing to complete five years, where the term itself is shorter. Confirm the current position for your contract with HR.