Gratuity Calculator 2026: Check Your Gratuity Amount Online

Gratuity is the one part of your salary package that most people cannot calculate in their head, and it is often the largest single payment you will ever receive from an employer. Whether you are planning to resign after years of service or approaching retirement, the gratuity calculator above gives you the exact figure in seconds. Enter your last drawn Basic plus DA, your years of service, and whether your employer is covered under the Payment of Gratuity Act, and the amount appears instantly along with your tax-free portion.

The stakes are real. On a Rs 50,000 Basic+DA with 15 years of service, gratuity works out to roughly Rs 4.3 lakh. Employees who do not know the formula routinely accept whatever figure HR hands them, and errors in years counted or in the Basic+DA base are more common than you would expect.

How Gratuity Is Calculated in India

For employers covered under the Payment of Gratuity Act, 1972 (any establishment with 10 or more employees, which covers almost every formal employer), the formula is:

Gratuity = Last drawn (Basic + DA) × 15/26 × completed years of service

The 15/26 fraction represents 15 days of wages for every year, using a 26-working-day month. Two details change outcomes significantly. First, only Basic and DA count, not your full CTC or gross salary. Second, service beyond six months in your final year rounds up to a full year: 12 years and 7 months counts as 13 years.

For employers not covered under the Act, the divisor becomes 30 instead of 26 and there is no rounding up, which produces a noticeably smaller figure for the same service.

Gratuity Amounts at Common Salary Levels (Act Formula)

Eligibility Rules at a Glance

Tax Treatment of Gratuity

The Rs 20 lakh ceiling is a lifetime limit across all employers, not per job. If you received Rs 8 lakh tax-free gratuity from a previous employer, only Rs 12 lakh of exemption headroom remains.

What Most People Get Wrong About Gratuity

The single biggest mistake is assuming gratuity is calculated on gross salary or CTC. It is Basic plus DA only, which is exactly why some employers keep Basic artificially low: it quietly shrinks their gratuity liability along with your EPF contributions. When comparing job offers, a higher Basic is worth more than the same money labelled as a special allowance. Run any offer through our LPA to in-hand salary calculator and check the Basic percentage before signing.

The second mistake is resigning a few months short of a rounding threshold. Leaving at 9 years and 5 months instead of 9 years and 7 months costs you a full year of gratuity. If you are close to a 6-month boundary, timing your last working day is free money.

Government employees should note their gratuity works differently: it is calculated under CCS Pension Rules using emoluments and a 16.5-month cap, and the 8th Pay Commission revision will raise it substantially since gratuity scales with the revised Basic.

Frequently Asked Questions

Is 4 years 8 months eligible for gratuity?

In many cases, yes. Multiple High Court rulings, most notably the Madras High Court in the Mettur Beardsell case, have held that 4 years and 240 days of continuous service in the fifth year satisfies the eligibility condition. However, this is not uniformly applied by every employer, and some will insist on the full 5 years unless challenged. If your employer refuses, a formal application under the Act followed by an appeal to the controlling authority usually resolves it. Keep your appointment letter and relieving documents ready as proof of service dates.

Is gratuity part of CTC?

Most large employers do include a gratuity provision of around 4.81 percent of Basic in your CTC, which is the annualised cost of the 15/26 formula. This is legal but worth understanding: the money is not paid to you monthly, and if you leave before 5 years you typically never receive it, which means your effective CTC was lower than advertised. When comparing offers, discount the gratuity component unless you genuinely expect to stay 5 or more years. It is one of several reasons CTC and take-home differ so much.

How is gratuity different for government employees?

Central and state government employees receive retirement gratuity and death gratuity under pension rules rather than the Payment of Gratuity Act. The formula uses one-fourth of monthly emoluments for each completed six-month period of service, capped at 16.5 times the monthly emoluments or Rs 25 lakh, whichever is lower. Government gratuity is fully tax-exempt with no ceiling. Since emoluments include DA, every DA hike and every pay commission revision directly raises the eventual gratuity payout.

Can an employer refuse to pay gratuity?

Only in narrow circumstances. Gratuity can be forfeited wholly or partly if the employee was terminated for riotous conduct, violence, or an offence involving moral turpitude committed in the course of employment, and the employer must follow due process to invoke this. An employer cannot withhold gratuity for ordinary reasons such as pending notice period disputes or unreturned assets beyond their actual value. Gratuity must be paid within 30 days of it becoming due, after which the employer owes interest on the delay.

Is gratuity taxable if I have already used my Rs 20 lakh exemption?

Yes. The Rs 20 lakh exemption under Section 10(10) is a lifetime aggregate across all employers. Any gratuity received beyond your remaining exemption headroom is added to your salary income and taxed at your slab rate in the year of receipt. High earners approaching the ceiling should factor this into retirement-year tax planning, since a large taxable gratuity can push significant income into the 30 percent slab in a single year.

Does gratuity apply to contract and fixed-term employees?

Fixed-term employees have been eligible for gratuity on a pro-rata basis even without completing 5 years since the 2018 notification on fixed-term employment, and the new Labour Codes reinforce this. Contract workers employed through a contractor are entitled to gratuity from the contractor if they meet the service condition. Gig and platform workers currently fall outside the gratuity framework, though the Code on Social Security contemplates schemes for them. If you work on renewable annual contracts with the same employer, continuous renewals generally count as continuous service.

What salary is used if my pay varied over the years?

Only the last drawn Basic plus DA matters; your salary history is irrelevant to the formula. This works strongly in your favour in a rising-salary career, because 15 years of service are all valued at your final, highest salary. It also means a demotion or restructuring that cuts your Basic just before exit directly cuts your gratuity. For piece-rated employees, the calculation uses the average of the last 3 months of wages instead.

How long does gratuity take to be paid?

The law requires the employer to determine and pay gratuity within 30 days of it becoming payable, whether or not you formally apply. In practice, submit Form I to your employer within 30 days of leaving to start the clock cleanly. If payment is delayed beyond 30 days, the employer is liable to pay simple interest at the rate notified by the government. Persistent non-payment can be escalated to the Controlling Authority under the Act, a process that is designed to be employee-friendly and does not require a lawyer.

This calculator and page are for educational purposes only and do not constitute tax or legal advice.