Gratuity Calculator (India)
Estimate the gratuity you have earned under India's Payment of Gratuity Act, 1972, from your last drawn salary and total years of service.
Estimate only, for private-sector employees covered under the Payment of Gratuity Act, 1972. Actual gratuity may vary with your employer's policy. Not legal or tax advice.
Frequently Asked Questions
What is the gratuity formula?
For employees covered under the Act, gratuity = (last drawn salary × 15 × completed years) ÷ 26, where salary is Basic + DA and 26 is the working days in a month.
Is gratuity tax-free?
Gratuity is exempt from income tax up to ₹20 lakh (₹2,000,000) over your lifetime. Any amount above this cap is added to your salary income and taxed at your slab rate.
How many years are needed to be eligible?
You generally need at least 5 years of continuous service with the same employer. This minimum is waived if service ends due to death or disablement.
Understanding the Gratuity Calculator (India)
The Gratuity Calculator (India) estimates the lump-sum gratuity a private-sector employee in India has earned under the Payment of Gratuity Act, 1972. Enter your last drawn monthly salary (Basic + Dearness Allowance) and your total length of service in years and months, and the tool instantly computes your gratuity using India's statutory 15-days-per-year formula. It rounds your final year up when you have served six months or more, flags whether you meet the five-year eligibility threshold, and shows how the Rs 20 lakh tax-free limit applies. Everything runs in your browser, so your salary details never leave your device.
How it works
Gratuity rewards long service. Under India's Payment of Gratuity Act, 1972, covered employees are granted 15 days of wages for every completed year of service, treating a month as 26 working days. You supply your last drawn salary (Basic + DA) and your years and months of service. The calculator rounds the final year up if it includes six months or more, then applies the formula below. It checks the five-year continuous-service rule and warns you if you fall short (waived for death or disablement). Finally it compares the result against the Rs 2,000,000 lifetime tax-free cap, marking any excess as taxable salary income so you see both the gross and exempt amounts.
Worked example
Suppose your last drawn salary (Basic + DA) is Rs 50,000 and you have worked 10 years and 7 months. Because the final 7 months is six months or more, service rounds up to 11 years. Gratuity = (50,000 x 15 x 11) / 26 = Rs 3,17,308. Since this is below the Rs 20 lakh tax-free cap, the entire amount is exempt from income tax in India. Had it exceeded Rs 20 lakh, only the portion above the cap would be taxed at your slab rate.
Tips & common mistakes
- Use only Basic salary plus Dearness Allowance (DA) as the salary input - do not include HRA, bonuses, or other allowances.
- Service of six months or more in your final year rounds that year up; less than six months is dropped, so timing your exit can matter.
- You generally need five years of continuous service to qualify, but this minimum is waived if employment ends due to death or disablement.
- Gratuity is tax-free up to Rs 20 lakh (Rs 2,000,000) across your entire career in India, not per employer - track cumulative gratuity received.
- This formula applies to employees covered by India's Payment of Gratuity Act, 1972; for non-covered employees the divisor changes to 30 days and rounding differs.
- Government employees in India often receive gratuity under separate rules with a higher ceiling, so confirm which scheme applies to you.
Sources & methodology
- • Payment of Gratuity Act, 1972 (Government of India)
- • Income Tax Act, 1961 - Section 10(10) gratuity exemption
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Reviewed by the TopOpenTools editorial team · Last updated June 2026. These tools provide general estimates for educational purposes only and are not financial, tax, insurance, investment, or medical advice. Verify important decisions with a qualified professional.