— Retirement & FIRE
Gratuity Calculator
Calculate statutory gratuity in India from last drawn salary and years of service. Apply the covered or non-covered employer formula, rounding rules, and tax exemption cap to see gross gratuity, tax-free amount, and taxable balance.
Gratuity amount
₹288,461.54
- Tax-exempt portion
- ₹288,461.54
- Years counted
- 10
- If non-covered (÷30)
- ₹250,000
Try: Covered: ₹50k, 10 yrs 7 mo, Above the ₹20 lakh cap, Not covered (÷30), Government (fully exempt)
— Calculation breakdown
| Component | Amount |
|---|---|
| Last drawn salary (basic + DA) | ₹50,000 |
| 15 days’ wages × 10 years ÷ 26 | ₹288,461.54 |
| Tax-exempt | ₹288,461.54 |
| Taxable | ₹0 |
— How it works
Covered: gratuity = (15 × last drawn salary × years of service) ÷ 26 — 15 days’ wages per completed year over a 26-day month; ≥6 months in the final year rounds it up. Non-covered: ÷ 30 on completed years. Tax-exempt up to ₹20 lakh (fully exempt for government employees).
How gratuity is worked out
If your employer is covered by the Payment of Gratuity Act — most firms with 10 or more employees — the formula is (15 × last drawn salary × years of service) ÷ 26: fifteen days’ wages for every completed year, with a month treated as 26 working days. A part-year of six months or more rounds up to a full year, so 10 years 7 months counts as 11. If your employer isn’t covered, the divisor is 30 (a full calendar month) and the final part-year isn’t rounded up. Either way, “salary” means basic pay plus dearness allowance.
Worked example — ₹50,000 last salary, 10 years 7 months, covered: The service rounds to 11 years, so gratuity = (15 × ₹50,000 × 11) ÷ 26 ≈ ₹3,17,308. Under the non-covered ÷30 formula on 10 years it would be ₹2,50,000.
Eligibility and the tax exemption
You generally need five years of continuous service to be eligible (with limited exceptions, such as death or disablement, and a 240-days-a-year rule that can count the fifth year). Gratuity is tax-free up to a lifetime cap of ₹20 lakh; anything above that is added to your income and taxed at your slab rate. For government employees the whole amount is exempt, with no cap. The calculator shows the gross figure, the exempt portion and any taxable balance, and flags when service is below the five-year threshold.
A statutory estimate
The ÷26 and ÷30 formulas, the ≥6-month rounding and the ₹20 lakh exemption cap are set by the Payment of Gratuity Act and tax law, and the cap has been revised over the years (it may change again). This tool follows the standard rules but can’t cover every employer-specific term — some pay more generous gratuity than the statutory minimum, and exact eligibility in edge cases (the 240-day rule, breaks in service) depends on your records. Treat the figure as the statutory entitlement and confirm with your employer or a professional.
— Reader questions
How is gratuity calculated?
For employees covered by the Act: (15 × last drawn basic + DA × years of service) ÷ 26, with 6+ months in the final year rounding up to a full year. For non-covered employees the divisor is 30 and the part-year isn’t rounded.
How many years do I need to get gratuity?
Normally five years of continuous service. There are exceptions (death or disablement), and a 240-days-per-year rule can sometimes let the fifth year count. The calculator flags when your service is under five years.
Is gratuity taxable?
It’s tax-free up to a lifetime cap of ₹20 lakh; any amount above that is taxable at your income-tax slab. Government employees’ gratuity is fully exempt with no cap.
What’s the difference between covered and non-covered?
Covered employers (those under the Payment of Gratuity Act) use a ÷26 divisor and round 6+ months up to a year. Non-covered employers use ÷30 on completed years. The covered formula usually gives a slightly higher amount.
Does the ₹20 lakh cap apply per job?
No — it’s a lifetime limit across all employers. If you’ve already used part of the exemption with a previous employer, less remains. This tool applies the full cap; adjust it in the advanced options if you’ve used some already.