How to use the Gratuity Calculator
- 1 Enter your last monthly basic plus DA.
- 2 Enter your completed years of service.
- 3 Enter any extra months: more than six counts as a full year.
- 4 Choose whether your employer is covered by the gratuity law.
Worked example
Last monthly basic plus DA of ₹60,000 with 8 years and 7 months of service. The 7 months count as a full year, so 9 years are used. Gratuity is ₹60,000 × 15 × 9 ÷ 26 = ₹3,11,538, all of it tax-free because it is well under the ₹20 lakh limit.
Features
15/26 formula
Wages × 15 ÷ 26 × years, as used under the gratuity law.
Service rounding
More than six months in the last year counts as a full year.
Tax-free limit
Shows the tax-free part up to ₹20 lakh.
Non-covered employers
Uses 15/30 when the employer is not covered.
When to use it
Resigning
Know your gratuity before you resign.
Retirement
Plan your retirement income.
Job offers
Value gratuity as part of your CTC.
Fixed-term staff
Check your entitlement after one year under the new labour codes.
Frequently asked questions
How is gratuity calculated?
Gratuity = last drawn basic plus DA × 15 × years of service ÷ 26. The 26 represents working days in a month, and 15 represents 15 days' wages for each year.
Who is eligible?
Employees with at least five years of continuous service, and under the Code on Social Security fixed-term employees after one year. The five-year rule does not apply on death or disablement.
What is the maximum gratuity?
Under the law, gratuity is capped at ₹20 lakh for most private sector employees. Employers may pay more voluntarily.
Is gratuity taxable?
For private employees, gratuity up to ₹20 lakh in a lifetime is tax-free. Government employees' gratuity is fully exempt.
What counts as wages?
Basic pay plus dearness allowance. Under the labour codes, wages must be at least 50% of total pay, which can raise gratuity for some employees.
When must it be paid?
Within 30 days of becoming payable. Late payment attracts simple interest.
Is gratuity part of CTC?
Many companies include gratuity of about 4.81% of basic in the CTC, even though it is paid only when you leave.
Is gratuity paid if I am fired?
Yes, unless you are dismissed for wilful damage to the employer's property, riotous conduct or an offence involving moral turpitude, in which case it can be forfeited fully or partly.
Do notice periods count as service?
Yes. The notice period is part of continuous service, which can take you past the five-year mark or the six-month rounding.
What about government employees?
Central government employees have a separate gratuity ceiling under their pension rules, and their gratuity is fully tax-free.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated