Gratuity Calculator India — Payment of Gratuity Act (15/26 Formula)

Gratuity is a lump sum your employer pays for long service in India, governed by the Payment of Gratuity Act, 1972. You become eligible after five years of continuous service, and the amount is (15 ÷ 26) × your last drawn monthly salary × completed years. This calculator applies that formula and the ₹20 lakh tax-free cap. It is for jobs in India and is different from the Gulf end-of-service rules.

🇮🇳 Calculate India Gratuity

Last drawn monthly salary — Basic + DA (₹)

Years of service

Is your employer covered by the Gratuity Act? (10+ employees)

Gratuity payable

Years counted

Tax-free?

⚠️ Disclaimer: CalcSmart is not a tax, financial, legal or medical advisor. Calculators and content here are for general information only, compiled from publicly available rules and rates that change frequently. Always verify the accuracy and freshness of figures with official sources (e.g. incometax.gov.in, cbic.gov.in, your bank) or a qualified professional before acting on any result.

The India Gratuity Formula

For employers covered by the Payment of Gratuity Act (10 or more employees):

Gratuity = (15 ÷ 26) × last drawn monthly salary (Basic + DA) × completed years of service

The 26 represents working days in a month, and 15 is half a month's wage. A completed year counts any part-year over six months as a full year — so 8 years 7 months is treated as 9 years, while 8 years 4 months stays 8 years.

Example: last salary (Basic + DA) of ₹50,000 with 8 years of service → (15 ÷ 26) × 50,000 × 8 = ₹2,30,769.

The five-year eligibility rule

You must complete five years of continuous service to be eligible, with one exception: if service ends due to death or disablement, the five-year condition is waived and gratuity is paid for the actual service. For counting, 4 years and 240+ days in the fifth year has been held by some courts to qualify, but employers vary in applying this.

Is gratuity taxable in India?

For non-government employees covered by the Act, gratuity is tax-free up to ₹20 lakh over your lifetime — the least of the actual gratuity, ₹20 lakh, or the formula amount. Anything above ₹20 lakh is taxable as salary. Government employees receive gratuity fully tax-free. To see how a taxable excess affects your liability, use our income tax calculator.

Employers not covered by the Act

If your employer is not covered (fewer than 10 employees), gratuity is often calculated as (15 ÷ 30) × last salary × years — using a 30-day month instead of 26, which produces a smaller amount. The ₹20 lakh tax-free cap still applies.

India vs the Gulf

This page is for jobs in India. If you worked in the Gulf, the formulas differ entirely: see the UAE gratuity calculator (21/30-day rule) and the Saudi gratuity calculator (half-month/full-month rule).

Frequently Asked Questions

For employers covered by the Payment of Gratuity Act, gratuity = (15 ÷ 26) × last drawn monthly salary (Basic + DA) × completed years of service. A part-year over six months counts as a full year. The amount is capped at ₹20 lakh tax-free.

Five years of continuous service. The only exception is when service ends due to death or disablement, where the five-year requirement is waived and gratuity is paid for the actual period served.

For non-government employees covered by the Act, gratuity is tax-free up to a lifetime limit of ₹20 lakh — the least of the actual gratuity received, ₹20 lakh, or the formula amount. Amounts above ₹20 lakh are taxed as salary. Government employees' gratuity is fully exempt.

Your last drawn monthly salary, defined as Basic salary plus Dearness Allowance (DA). Allowances like HRA, bonuses and overtime are not included in the gratuity calculation.

India uses the 15/26 formula after five years of service under the Payment of Gratuity Act. The UAE uses 21 days' pay per year (30 after five years), and Saudi Arabia uses half a month per year for the first five years and a full month after. The three are not interchangeable.