The Gratuity Calculator tells you how much gratuity you are entitled to when you leave a job after five or more years of service. Enter your last drawn monthly salary (basic pay plus dearness allowance) and your years of service, and it instantly calculates the gratuity amount along with how much of it is tax-free.
Gratuity is a lump-sum reward employers pay for long service under the Payment of Gratuity Act. This calculator uses the standard statutory formula and runs entirely in your browser, so none of your salary details are uploaded or stored.
How to use the gratuity calculator
- Enter your last drawn monthly salary — basic pay plus dearness allowance (not your full CTC).
- Enter your total completed years of service (gratuity needs at least 5 years).
- Read the gratuity amount and the tax-exempt portion.
- Adjust the sliders to see how a longer tenure or higher salary changes the payout.
How gratuity is calculated
For employees covered by the Payment of Gratuity Act, gratuity is calculated as: last drawn monthly salary × 15 × years of service ÷ 26. The 15/26 represents 15 days of salary for each completed year, based on a 26-day working month.
Salary here means basic pay plus dearness allowance only, not allowances or bonuses. A period of more than six months in the final year is usually rounded up to a full year.
Gratuity rules and tax
- You are eligible after 5 years of continuous service with the same employer.
- Gratuity is tax-free up to ₹20 lakh over your career; anything above is taxed at your slab.
- It is payable on retirement, resignation, or (without the 5-year rule) on death or disablement.
- This formula applies to employees covered by the Gratuity Act; other cases may use 1 month’s salary per year.
Frequently Asked Questions
What is the gratuity formula?
For employees covered by the Payment of Gratuity Act, gratuity = (last drawn monthly salary × 15 × years of service) ÷ 26, where salary is basic pay plus dearness allowance.
How many years of service are needed for gratuity?
You generally need at least 5 years of continuous service with the same employer. The 5-year rule is waived if service ends due to death or disablement.
Is gratuity taxable?
Gratuity is tax-free up to a lifetime limit of ₹20 lakh. Any amount above that limit is added to your income and taxed at your applicable slab rate.
Which salary is used — basic or CTC?
Only your basic pay plus dearness allowance is used, not your full CTC or gross salary. Enter that figure for an accurate result.