Gratuity Calculator
For employees covered by the Payment of Gratuity Act, gratuity equals your last drawn basic + DA multiplied by 15/26 for every completed year of service (a part-year over six months rounds up). Gratuity is tax free up to ₹20,00,000 in your lifetime. You are eligible after five years of continuous service. Enter your salary and tenure below to calculate your payout.
Updated July 2026. Figures for FY 2025-26 (AY 2026-27).
How it is calculated
The formula
For employees covered by the Gratuity Act: Gratuity = (last drawn monthly basic + DA) × 15/26 × completed years of service. The 15/26 represents 15 days of wages for each year, based on a 26-day working month.
Eligibility and rounding
You become eligible for gratuity after completing five years of continuous service (except on death or disablement). Service beyond six months in the final year is rounded up to a full year.
Tax exemption
Gratuity is exempt from income tax up to ₹20,00,000 over your lifetime for private employees. Anything above that is taxable. Government employees get full exemption.
Worked example. ₹50,000 last basic + DA over 12 years and 8 months (rounded to 13): 50000 × 15/26 × 13 = ₹3,75,000, fully tax free.
Frequently asked questions
How is gratuity calculated in India?
For covered employees: last drawn basic + DA × 15/26 × completed years of service. For example, ₹50,000 basic + DA over 10 years gives about ₹2,88,462.
When am I eligible for gratuity?
After five years of continuous service with the same employer. The five-year condition is waived if service ends due to death or disablement.
Is gratuity taxable?
Gratuity is tax free up to ₹20,00,000 in your lifetime for private-sector employees. Amounts above the cap are added to your income and taxed at slab rates.
Does a partial year count for gratuity?
Yes. Any service beyond six months in the final year is rounded up to a full year. For instance, 10 years and 7 months counts as 11 years.
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