Gratuity Calculator (India)
The gratuity calculator estimates the gratuity you receive after at least 5 years of continuous service, using 15/26 × last drawn basic + DA × completed years for employees covered by the Gratuity Act.
Last updated 2026-08-14
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quizExample
How this calculator works, with real numbers (no JavaScript needed):
Inputs
- Last drawn basic + DA
- 40000
- Completed years of service
- 12
- Covered by the Gratuity Act
- true
Results
- Gratuity amount
- ₹2,76,923.08
- How it was calculated
- Covered by the Act — 15/26 × ₹40000 × 12 years
functionsThe formula
Gratuity is a lump-sum payment your employer gives you when you leave a job after at least 5 years of continuous service, as a reward for your time there. It is governed by the Payment of Gratuity Act, 1972.
The formula
For employees covered by the Act:
Gratuity = Last drawn (basic + DA) × Completed years × 15 / 26
- 15 days of wages for each completed year of service
- The daily wage is the monthly wage divided by 26 (working days)
For employees not covered by the Act (some private employers), a common alternate formula uses 15/30 instead of 15/26.
Worked example
Last drawn basic + DA = ₹40,000, completed 12 years, covered by the Act:
- Gratuity = 40,000 × 12 × 15 / 26 = ₹2,76,923
Eligibility rules
- You must complete 5 continuous years of service (5 years 240 days for underground mines).
- "Continuous service" counts your entire period with the employer; resignations, retirements and most terminations all qualify.
- The Act's original ₹20 lakh cap was removed for many employees by the 2024 amendments, so large gratuities may no longer be capped — check current law for your case.
Tax treatment
Under Section 10(10) of the Income-tax Act, gratuity received by government employees is fully exempt. For non-government employees covered by the Act, the exemption is the lowest of: the actual amount, ₹20 lakh, or the amount computed by the 15/26 formula. Anything above the exempt amount is taxable in the year you receive it.
helpFrequently asked questions
question_markWhat is gratuity in India?
Gratuity is a lump-sum payment employers give employees after at least 5 years of continuous service, under the Payment of Gratuity Act, 1972.
question_markHow is gratuity calculated?
For employees covered by the Act, gratuity = last drawn basic + DA × completed years × 15/26. It is based on 15 days of wages for each completed year of service.
question_markWhat happens if I leave before 5 years?
You are generally not eligible for gratuity if you leave before completing 5 years of continuous service. There is an exception: gratuity is payable on death or disability regardless of tenure.
question_markIs gratuity taxable?
For non-government employees covered by the Act, gratuity is exempt up to the lowest of the actual amount, ₹20 lakh, or the 15/26 formula amount. The excess is taxable.