Gratuity calculator
How it is worked out
For employers covered by the Payment of Gratuity Act: gratuity = 15 ÷ 26 × last monthly basic + DA × years of service. The 15/26 is 15 days' wages for each year, counting 26 working days in a month. A final part-year of more than six months counts as a full year.
For employers not covered, it is commonly half a month's average salary for each completed year (15 ÷ 30). For private-sector employees, gratuity up to ₹20 lakh over a lifetime is exempt from income tax; government employees' gratuity is fully exempt.
Questions
How is gratuity calculated?
15 × last drawn basic + DA × years of service ÷ 26, for employers covered by the Payment of Gratuity Act. ₹60,000 basic for 9 counted years gives about ₹3,11,538.
Who is eligible for gratuity?
Employees with at least 5 years of continuous service, or earlier on death or disablement. Rules for fixed-term employees changed with the newer labour codes; check with your employer.
Is gratuity taxable?
For private-sector employees, up to ₹20 lakh over a lifetime is tax-free; any excess is taxed as salary.
Does 4 years and 6 months count as 5 years?
A final part-year over six months counts as a full year in the calculation, but eligibility needs 5 years of continuous service; some court rulings have treated 4 years and 240 days as 5 years.
Educational calculator only, not financial, tax or investment advice. Results follow the formulas and the assumptions you enter; actual amounts depend on your lender, bank, employer and the rules that apply to you. Past performance does not indicate future results. Read the Disclaimer.