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Gratuity Calculator

Estimate Your Gratuity Amount in India

Work out exactly how much gratuity you'll receive on retirement, resignation, or after five years of service, using the formula set out in the Payment of Gratuity Act, 1972.

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Calculate Your Gratuity

Is your organisation covered under the Payment of Gratuity Act?
Most establishments with 10 or more employees are covered. If unsure, keep this on "Covered".

What Is Gratuity?

Gratuity is a lump-sum benefit an employer pays an employee as a reward for long, continuous service. It isn't part of the monthly salary — it's held back and paid out when the employee leaves the organisation, whether through retirement, resignation, or otherwise, provided the minimum service condition is met. In India, gratuity is governed by the Payment of Gratuity Act, 1972, which applies to factories, mines, plantations, ports, railways, shops and any establishment employing 10 or more people.

Gratuity Calculation Formula

The amount depends on whether your employer falls under the Payment of Gratuity Act. Both versions use the same idea — roughly half a month's pay for every year served — but differ in the divisor used for a working month.

Employees covered under the Act

Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 26

  • 15 = Days' wages paid for every completed year of service
  • 26 = Average working days counted in a month
Employees not covered under the Act

Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 30

Here the full 30 calendar days of a month are used instead of 26 working days, which slightly lowers the payout compared with a covered employee on the same salary and tenure.

Who Is Eligible for Gratuity?

  • You've completed at least 5 years of continuous service with the same employer.
  • You're leaving due to retirement, resignation, superannuation, or termination for reasons other than misconduct.
  • Your employer has 10 or more employees on its rolls, on any day in the preceding 12 months.

The 5-year condition is set aside if service ends because of the employee's death or disablement — in that case gratuity is paid to the nominee or legal heir regardless of tenure.

Is Gratuity Taxable?

Government employees

Gratuity received is fully exempt from income tax, with no upper limit.

Private-sector employees covered under the Act

Exempt up to the lowest of — the actual amount received, ₹20,00,000, or the amount worked out using the formula above.

Amount above the exemption limit

Treated as income and taxed at your applicable slab rate.

Frequently Asked Questions

Clear answers to the questions people ask most about gratuity in India.

For employees covered under the Payment of Gratuity Act, 1972: Gratuity = (Last drawn Basic Salary + Dearness Allowance) × 15/26 × Number of completed years of service. For employees not covered under the Act, 26 is replaced by 30 in the formula.