Gratuity Calculator · FY 2026-27

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Calculate gratuity payable on retirement, resignation, or end of service as per the Payment of Gratuity Act 1972. Includes tax-free portion and taxable balance.

Last updated: FY 2026-27 / AY 2027-28

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₹50,000
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10 years
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Companies with 10+ employees are covered by the Act.
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How gratuity is calculated

Gratuity in India follows the Payment of Gratuity Act 1972. The formula depends on whether your employer is covered by the Act (most companies with 10+ employees):

Covered: (Last salary × 15 × years) / 26
Not covered: (Last salary × 15 × years) / 30
  • Last salary - basic + DA at termination/retirement
  • 15 - 15 days of wages per completed year of service
  • 26 / 30 - working days in a month (covered uses 26 - assumes 4 Sundays off)

Fractions of a year ≥ 6 months count as a full year (covered employees only).

Eligibility & tax

When you're eligible

  • 5+ years of continuous service with the same employer (waived in case of death or permanent disability)
  • Apply on retirement, resignation, retrenchment, death, or disablement

Tax treatment

  • Government employees - entire gratuity is fully tax-free
  • Private employees (covered by Act) - tax-free up to ₹20 lakh (lifetime); excess taxable at slab rate
  • Private (not covered) - exemption is the least of: ₹20L, actual gratuity, or (10 × avg salary × years)/2

What counts as "salary"

For gratuity calculation, "salary" means Basic + Dearness Allowance only - not HRA, special allowance, or bonus.

Common questions

Frequently asked questions

What is the minimum service required for gratuity?

Five continuous years with the same employer. The 5-year requirement is waived in case of death or permanent disability, where any unpaid gratuity is payable to the nominee or legal heir.

How are fractional years treated?

Under the Gratuity Act (covered employers): if you've completed 6 months or more in your last incomplete year, it counts as a full year. Less than 6 months is dropped. So 15 years 7 months counts as 16; 15 years 5 months counts as 15.

Is gratuity always tax-free?

For central/state government employees, the full amount is tax-free. For private-sector employees, up to ₹20 lakh is tax-free across your lifetime; anything above that is taxed at your slab rate.

What if my employer isn't covered by the Act?

The formula changes to 15/30 (instead of 15/26), giving a slightly lower amount per year. The ₹20 lakh tax cap still applies, and the tax-free portion is the least of: ₹20L, actual gratuity received, or (10 × average salary × years)/2.

Can I get gratuity if I resign before 5 years?

Usually no - the Act requires 5 years of continuous service. Some employers voluntarily pay an ex-gratia amount, but that's not statutory.

Does the formula apply to all salaries?

The Act caps gratuity at ₹20 lakh per Section 4(3). Anything calculated above this is paid only at the employer's discretion - but the tax-free exemption is still ₹20 lakh.

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Disclaimer: This estimate is for illustration only. Actual gratuity depends on your employer's policy, applicable formula (covered vs not covered), date of joining and leaving, leave encashment, and tax position. Please confirm the final entitlement with your HR or payroll team.