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Gratuity Calculator — Know Your Gratuity Amount

Gratuity is a lump sum your employer pays you when you leave after 5+ years of service. Calculate your exact gratuity amount using the official government formula.

Corrected 29 August 2026. An earlier version of this page excluded target variable pay from both received cash and taxable salary, which understated income tax. Figures are recalculated under model PS-A3. What changed →

Short answer: gratuity is (last drawn Basic + DA) × 15 × years of service ÷ 26, payable after five years with an employer. On a ₹50,000 basic and 10 years of service that is ₹2,88,462, and up to ₹20 lakh of it is tax-exempt.

Last Drawn Basic Salary (Monthly)
Dearness Allowance (Monthly)
Years of Service

Formula: (Basic + DA) × 15 × Years ÷ 26 | Service above 6 months in last year is rounded up to 1 year

Tax-Exempt (up to ₹20L)
Taxable Amount
Last Drawn Salary (Basic + DA)—
Total Gratuity Amount—
Tax-Exempt Amount (max ₹20L)—
Taxable Amount—

Rates and slabs are indicative, as of August 2026

What is Gratuity and Who Gets It?

Gratuity is a retirement benefit paid by your employer as a thank-you for long service. Under the Payment of Gratuity Act, 1972, any employee who has completed 5 or more years of continuous service is entitled to gratuity when they resign, retire, or are terminated. The only exception is termination for misconduct — in that case, gratuity can be forfeited.

Important: If you have completed 4 years and 240 days (approximately 4 years and 8 months), many courts have held that this counts as 5 years for gratuity purposes. So even if you are a few months short of 5 years, you may still be eligible — check with your HR.

The Gratuity Formula

For employees covered under the Gratuity Act (companies with 10+ employees):

Gratuity = (Last Drawn Basic Salary + DA) × 15 × Years of Service ÷ 26

The "15" represents 15 days of wages for each year of service. The "26" represents the working days in a month (30 minus 4 Sundays). If your last completed year of service is more than 6 months, it is rounded up. For example, 7 years and 8 months is counted as 8 years.

Tax Treatment

For private sector employees, gratuity up to ₹20 lakh is exempt from income tax. Any amount above ₹20 lakh is added to your taxable income for that year. For government employees, gratuity is fully exempt from tax with no upper limit. The ₹20 lakh limit was increased from ₹10 lakh in 2019.

💡 When Changing Jobs: Your gratuity is calculated on your last drawn salary, not your average salary. If you are planning to leave, remember that any salary increment just before leaving increases your gratuity amount. Also, gratuity from previous employers does not carry forward — each employer calculates separately.
⚠️ Disclaimer: This calculator uses the standard formula under the Payment of Gratuity Act. Actual gratuity may differ based on employer policy, contractual terms, or if the employer is not covered under the Act. Tax exemption limit is ₹20 lakh for private sector as of FY 2025-26 and FY 2026-27.

Related: Salary Calculator | CTC Breakdown Guide | Income Tax Calculator

Sources

The official pages this page is checked against. If one of them disagrees with us, it wins.

Written and checked by the PaisaSamajh editorial desk · Last reviewed: 24 August 2026 · How we check this →