Calculate your exact gratuity payout using the Payment of Gratuity Act formula. Enter your last drawn salary and years of service — instant result with tax-free limit, taxable amount and formula breakdown.
6+ months in last year counts as full year
—
Gratuity payable as per the Payment of Gratuity Act
—Tax-Free Portion
—Taxable Portion
—Service (Rounded)
—Divisor Used
Formula Breakdown
Basic + DA (monthly)—
× 15 (days of Basic per year)× 15
× Years of Service—
÷ Divisor (working days in month)—
Gratuity Payable—
—
How to Use This Calculator
1
Enter last drawn Basic + DA
Use the Basic Salary and Dearness Allowance from your final month payslip. Do not include HRA, Special Allowance, Bonus, or any other component.
2
Enter completed years of service
Enter total years of service. If your last year has 6 or more months, it rounds up to a full year — enter the rounded figure.
3
Select organisation type
If your employer has 10 or more employees, select "Covered by Act" (divisor 26). Smaller establishments use divisor 30.
4
Read your gratuity and tax liability
The result shows total gratuity, how much is tax-free (up to ₹20 lakh), and the taxable amount if any.
💡The 15/26 divisor assumes 26 working days per month — so 15/26 ≈ 0.577 of a month's Basic per year of service. On 10 years at ₹50,000/month Basic: ₹50,000 × 15 × 10 ÷ 26 = ₹2,88,462.
Gratuity is a statutory retirement benefit paid by employers to employees as a token of appreciation for long service. In India, it is governed by the Payment of Gratuity Act, 1972, which applies to all factories, mines, oilfields, plantations, ports, railway companies, shops, and establishments with 10 or more employees.
Gratuity becomes payable when an employee leaves employment after completing at least 5 continuous years of service — whether through resignation, retirement, death, or disability. The only exceptions to the 5-year rule are death and disability, where gratuity is paid regardless of tenure.
6-month rounding rule: If the last year of service has 6 months or more, it is counted as a full year for gratuity purposes. So 7 years 7 months = 8 years of service for gratuity. 7 years 4 months = 7 years.
Gratuity Formula — 15/26 vs 15/30 Explained
For organisations covered under the Act (10+ employees)
Gratuity = (Basic + DA) × 15 × Years of Service ÷ 26
For organisations not covered (under 10 employees)
Gratuity = (Basic + DA) × 15 × Years of Service ÷ 30
Example: Basic ₹50,000/month · 10 years · Covered by Act
Basic + DA = ₹50,000 (no DA in this case)
Gratuity = ₹50,000 × 15 × 10 ÷ 26
Gratuity = ₹7,50,000 ÷ 26 = ₹2,88,462
The divisor of 26 assumes a 6-day working week with approximately 26 working days per month. The "15 days" is the agreed gratuity entitlement per year of service — roughly half a month's salary for each year worked.
Gratuity Tax Exemption — ₹20 Lakh Limit
Gratuity received by non-government employees is tax-free up to ₹20,00,000 (₹20 lakh), effective from 29 March 2018 (revised from the earlier limit of ₹10 lakh). This limit applies to the lifetime total of gratuity received — not per employer.
Category
Tax Treatment
Government employees (Central/State)
Fully tax-free (no limit)
Non-government employees (Act covered)
Tax-free up to ₹20 lakh
Non-government employees (not covered)
Tax-free up to ₹20 lakh (min of formula)
Amount above ₹20 lakh
Added to income and taxed at slab rate
Lifetime limit: The ₹20 lakh exemption is a cumulative limit across all gratuities received in your lifetime. If you received ₹12 lakh from a previous employer and ₹15 lakh from a new one, only ₹8 lakh of the second gratuity is tax-free (₹20L − ₹12L already exempted).
When Gratuity Can Be Forfeited
Resignation before 5 years: Gratuity is fully forfeited if you voluntarily resign before completing 5 continuous years.
Termination for misconduct: The employer can forfeit part or all of the gratuity if the employee is terminated for wilful omission, negligence, or misconduct that caused loss to the employer. A court or tribunal must confirm the grounds.
Death or disability: Even if service is under 5 years, gratuity is fully payable to the nominee or the employee.
Retrenchment or layoff: Gratuity is always payable in a retrenchment, regardless of completed years of service.
Frequently Asked Questions
For organisations covered under the Act (10+ employees): Gratuity = (Basic + DA) × 15/26 × Years. For not covered: (Basic + DA) × 15/30 × Years. Service is rounded — 6 or more months in the last year counts as a full year.
Minimum 5 years of continuous service under the Payment of Gratuity Act. Death and disability are exceptions — gratuity is paid even before 5 years in those cases.
₹20,00,000 (₹20 lakh) for non-government employees. This is a lifetime cumulative limit. Government employees receive fully tax-free gratuity with no limit.
Gratuity is calculated on Basic Salary + Dearness Allowance only. HRA, Special Allowance, Bonus, and other components are excluded. This is why a higher Basic results in higher gratuity.
You forfeit gratuity entirely if you voluntarily resign before completing 5 continuous years. The only exceptions are death, disability, and retrenchment — where gratuity is paid regardless of tenure.
For organisations not covered under the Act (under 10 employees): Gratuity = (Basic + DA) × 15/30 × Years. The divisor is 30 instead of 26, giving a lower payout than Act-covered organisations at the same salary and tenure.
The employer must pay gratuity within 30 days of it becoming payable — within 30 days of resignation, retirement, or termination. Late payment attracts simple interest at the prescribed rate from the due date.
Yes. Every employee must nominate one or more family members using Form F within 30 days of joining. In case of death, the nominee receives the gratuity. Nomination can be updated at any time.