Gratuity Calculator
Estimate the gratuity payable when you leave a job, based on your last salary and years of service.
Gratuity = (15 × last drawn monthly wages × years of service) / 26, capped at the ₹20 lakh statutory limit, under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act from 21 November 2025. Wages are basic plus DA, but the allowances left out may not exceed half of total pay — if they do, the excess counts as wages, which is what the optional total-pay field applies. A permanent employee qualifies after 5 years of continuous service; a fixed-term employee after 1 year. A period of service over 6 months in the final year counts as a full year.
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How it works
This calculator computes the gratuity payable when you leave a job, under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972 from 21 November 2025. Enter your last drawn monthly salary (basic plus DA), optionally your total monthly pay, and completed years of service — it applies the statutory formula and the ₹20 lakh cap, and tells you when the formula value exceeds the cap.
The formula is (15 × last drawn monthly salary × years of service) ÷ 26 — fifteen days' wages for every year of service, with 26 standing for the working days in a month. Salary here means basic plus dearness allowance, not gross or CTC. A period of service beyond six months in the final year rounds up to a full year, so 10 years 7 months counts as 11 years.
Eligibility requires five years of continuous service with the employer — one year for a fixed-term employee — a condition waived if the employee dies or is disabled. The Code also caps the allowances left out of wages at half of total pay: anything above that is added back to wages, so gratuity is never worked out on less than half your total pay. The statutory maximum is ₹20 lakh, unchanged since 2018 — an employer may pay more voluntarily, but the amount above the formula-and-cap entitlement is taxed differently.
Gratuity = (15 × S × Y) / 26, capped at ₹20,00,000S is the last drawn monthly salary (basic + DA) and Y is completed years of service, with more than six months in the final year counted as a full year. The 15/26 factor is fifteen days' wages per year of service, on a 26-working-day month.
Frequently asked questions
What is the gratuity eligibility rule?
Gratuity under the Code on Social Security, 2020 (which replaced the Payment of Gratuity Act on 21 November 2025) is payable to a permanent employee only after five years of continuous service with the same employer, and to a fixed-term employee after one year, on leaving the job — resignation, retirement or termination. The five-year condition is waived when the employment ends due to the employee's death or disablement, in which case gratuity is payable to the employee or their nominee regardless of tenure.
How is gratuity calculated?
Gratuity is (15 × last drawn monthly wages × years of service) ÷ 26, where wages mean basic plus dearness allowance — but if the allowances left out exceed half of total pay, the excess is added back to wages. It amounts to fifteen days' wages for every completed year of service, using a 26-working-day month. For example, a ₹50,000 monthly basic+DA and 10 years of service gives 15 × 50,000 × 10 ÷ 26 ≈ ₹2.88 lakh. The statutory amount is capped at ₹20 lakh.
What is the maximum gratuity payable?
The statutory ceiling is ₹20 lakh, a limit set in 2018 and unchanged since. If the formula produces more — which happens at high salaries with long service, for instance ₹1.2 lakh monthly basic+DA over 30 years computes to about ₹20.8 lakh — the entitlement is capped at ₹20 lakh. Employers may pay above the cap voluntarily, but that excess is outside the statutory entitlement.
Does 4 years and 8 months of service qualify for gratuity?
The Act's rounding rule — service beyond six months in the final year counts as a full year — applies to computing the amount, not to the five-year eligibility gate, so the safe reading is that 4 years 8 months does not qualify. Some High Court rulings have accepted 4 years and 240 days in the fifth year as qualifying, but this is not uniformly settled; five completed years is the clear statutory threshold.
Is gratuity taxable?
For government employees, gratuity is fully exempt from income tax. For private-sector employees covered by the statutory gratuity law (now the Code on Social Security), the exemption is the least of the actual gratuity received, the amount the statutory formula produces, and ₹20 lakh — a lifetime limit across employers. Any gratuity received beyond the exempt amount is taxed as salary income in the year of receipt.
Go further
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Why 15/26, what counts as a completed year, and the cliff that pays nothing below it.