Gratuity calculator
Estimate gratuity under the Payment of Gratuity Act, 1972: last drawn basic plus DA, times 15/26, times completed years of service.
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How gratuity is calculated
Gratuity = last drawn (basic + DA) × 15⁄26 × completed years of service.
- 15 stands for fifteen days' wages per completed year; 26 is the number of working days in a month for this purpose.
- Service of more than six months in the final year rounds up to a full year. Seven years and eight months counts as eight years.
- Gratuity generally becomes payable after five years of continuous service, on leaving, retirement or death.
- The maximum statutory gratuity is ₹20,00,000. Amounts above that are at the employer's discretion.
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Common questions
Does 4 years and 8 months of service qualify for gratuity?
It is genuinely disputed. The Act's threshold is five years of continuous service, and some court decisions have treated roughly 4 years and 240 days as qualifying. Employers differ in practice, so check your company's policy and take professional advice.
Is gratuity taxable?
For employees covered by the Payment of Gratuity Act, gratuity is exempt from income tax up to the statutory limit of ₹20,00,000 across a lifetime; amounts beyond that are taxable. This is general information, not tax advice.
Can an employer pay more than the formula?
Yes. The Act sets a minimum and a ₹20 lakh statutory ceiling for the mandated amount, but an employer can be more generous by policy. Anything above the exemption limit is taxable in your hands.
Is gratuity payable if I resign?
Yes, resignation counts, provided you meet the continuous-service requirement. Gratuity is payable on resignation, retirement, or death or disablement, where the five-year rule is waived.