Gratuity Calculator: Know Your Exact Gratuity Amount for FY 2026-27
By LegalDev India Finance Team | Last updated: 21 October 2026
Gratuity Calculator: Calculate Gratuity Amount Online
A gratuity calculator shows what your employer owes you before you resign or retire. Enter your last drawn Basic + DA and years of service; for covered employers the amount is Basic + DA × 15 × years ÷ 26. Five continuous years are needed, except on death or disablement, and up to ₹20 lakh is tax-free for private employees.
Your last working day is fixed, the new offer is signed, and one number is still missing from your exit math: the gratuity cheque. This page works it out for you, and tells you which rules could change it.
What Is a Gratuity Calculator?
A gratuity calculator applies the statutory formula to your salary and length of service and returns an estimated payout. It answers one question: what does my employer owe me when I leave?
It will not replace the final settlement your employer issues, but it tells you whether that settlement is right.
How Does a Gratuity Calculator Work?
It takes three inputs, counts your years the way the law counts them, and multiplies. For a covered employer it works out 15 days of wages for each year, using 26 as the number of working days in a month. Then it checks the result against the ₹20 lakh tax ceiling to split the amount into an exempt part and a taxable part.
Who Should Use a Gratuity Calculator?
Employees planning to resign. Run it before you give notice. A few weeks can decide whether you qualify at all.
People close to retirement. It gives you a figure to plan the lump sum around.
HR and payroll teams. Use it to cross-check full-and-final settlements and provisions.
Fixed-term contract employees. The one-year rule is new and many people do not know it applies to them.
How to Use the Gratuity Calculator
Enter your payslip figures, pick the coverage option, and read the result. It takes under a minute.
Gratuity Calculator Inputs
| Input | What to Enter |
|---|
| Last drawn monthly salary (Basic + DA) | Take Basic and Dearness Allowance from your last payslip. Leave out HRA, special allowance, bonus and overtime. |
| Years of service | Enter years and months. The tool applies the rounding rule for you. |
| Establishment covered under the Payment of Gratuity Act? (Yes/No) | Choose Yes if your employer pays gratuity under the statute, which has traditionally meant ten or more employees. Unsure? Ask HR in writing. |
The form still says "Payment of Gratuity Act" because that is the name on most payslips, policies and tax forms. The governing law is now the Code on Social Security, 2020, as explained further down.
Gratuity Calculator Results
You get five outputs:
- Estimated gratuity amount
- Years counted after rounding
- Formula applied (15/26 or 15/30)
- Tax-exempt portion
- Taxable portion
The exempt figure assumes you have not already claimed a gratuity exemption from an earlier employer. Government employees are fully exempt.
Step-by-Step Example
Meera joined on 3 March 2017 and her last day is 30 November 2026. Her payslip shows Basic ₹38,000 and DA ₹4,000, with total pay of ₹78,000. Her employer is covered by the law.
1Salary for gratuity: ₹38,000 + ₹4,000 = ₹42,000. The ₹78,000 gross is not used.
2Service: 9 years, 8 months, 27 days. Eight months is more than six, so 10 years are counted.
3Gratuity: 42,000 × 15 × 10 ÷ 26 = ₹2,42,308
4Tax: ₹2,42,308 is below ₹20 lakh and equals the formula amount, so all of it is exempt.
Had her employer been outside the law, using 15 ÷ 30 on 9 completed years, she would receive 42,000 × 15 × 9 ÷ 30 = ₹1,89,000. Coverage is worth about ₹53,000 to her here, part of it from the rounding rule.
Gratuity Eligibility Rules
You qualify for gratuity after five years of continuous service with the same employer, when your employment ends by superannuation, retirement or resignation. Death and disablement are exceptions. Fixed-term employees now have their own one-year rule.
Minimum 5 Years of Continuous Service
Section 53 of the Code sets the five-year condition, and the Income Tax Department's retirement-benefits tutorial repeats it. Approved leave and certain breaks do not interrupt "continuous service"; Section 54 of the Code has the deeming rules, including a 240-day working year (190 days for some establishments).
The edge cases are where people lose money, so here is how they play out:
| Your Situation | What the Law Says | What to Do |
|---|
| 4 years 11 months, employer says no | The Code's text says five years. Some High Court rulings applied the 240-day rule to the last year, but outcomes differ. | Ask the employer in writing for its position. If your relieving date can move a few weeks, compare that with a possible dispute. |
| Notice period is running | Days you serve count as service. Early release or waiver moves your end date. | Confirm the relieving date in your resignation acceptance before you sign off. |
| Employer policy says 4 years 180 days | A policy can be more generous than the statute. | Ask HR for the written policy; it binds the employer. |
| Fixed-term contract, 14 months | One-year rule applies since 21 Nov 2025; pay is pro rata. | Ask for the pro rata calculation when the contract ends. |
| Changing jobs at year 3 | Service does not carry to the next employer. | Nothing is payable under the statute; check for any contractual benefit. |
6-Month Rounding Rule
A part of a year in excess of six months is counted as a full year. Section 53(2) of the Code uses the words "in excess of six months", and the Income Tax Department tutorial repeats them for the tax formula. Exactly six months does not round up.
| Service | Years Counted |
|---|
| 6 years 2 months | 6 |
| 6 years 6 months | 6 |
| 6 years 7 months | 7 |
| 9 years 8 months | 10 |
Several calculator pages say "6 months or more". That would round 6 years 6 months up to 7 and overstate the payout.
Exception for Death or Disablement
If employment ends because of death, or disablement due to accident or disease, the five-year rule does not apply. In a death case, gratuity goes to the nominee or, with no nomination, to the legal heirs. Employees should file a nomination once they complete one year of service (Section 55).
What Changed After 21 November 2025
The Government of India brought the four labour codes into force on 21 November 2025 (PIB press release, 21 Nov 2025). For gratuity that meant four practical changes.
- New law. The Code on Social Security, 2020 (Chapter V, Sections 53 to 58) replaced the Payment of Gratuity Act, 1972.
- Fixed-term employees. They are eligible after one year of continuous service, paid pro rata. The Ministry's release lists this as a headline benefit.
- Wages with a 50% floor. Allowances and other excluded items above half of total remuneration are added back to wages. The Social Security (Central) Rules, 2026, notified on 8 May 2026 (G.S.R. 344(E)), did not keep the detailed exclusions proposed in the draft, so the Code's own definition and the Ministry's FAQs govern (BDO alert, 2026).
- Claim timelines. As reported by law-firm summaries of the 2026 Rules, an employer has 15 days from a written claim to accept or reject it in Form V and must pay within 30 days of the application. Disputes are meant to be decided within six months. Separately, Section 56(3) of the Code requires payment within thirty days of gratuity becoming payable.
The 50% rule with numbers. Total remuneration is ₹1,00,000 a month, of which Basic + DA is only ₹30,000. Excluded items are ₹70,000, which is ₹20,000 above the 50% mark, so wages become ₹50,000. Ten years of service then gives 50,000 × 15 × 10 ÷ 26 = ₹2,88,462, against ₹1,73,077 on ₹30,000. How your employer applies the floor depends on your salary structure, so ask HR for the working.
Gratuity Calculator Example: ₹50,000 Last Drawn Salary
All three examples use the covered-employer formula with Basic + DA of ₹50,000. Each extra year adds about ₹28,846.
Example 1: 5 Years of Service
50,000 × 15 × 5 ÷ 26 = ₹1,44,231. This is the first year gratuity becomes payable for a regular employee.
Example 2: 10 Years of Service
50,000 × 15 × 10 ÷ 26 = ₹2,88,462. Doubling the service doubles the payout, because the formula is linear.
Example 3: 15 Years of Service
50,000 × 15 × 15 ÷ 26 = ₹4,32,692. All three amounts are far below ₹20 lakh, so the full amount is exempt for a private-sector employee.
Gratuity Amount Table: Salary and Years of Service
Use these figures as a quick check. They assume a covered employer, whole years counted and Basic + DA as the salary. Amounts are rounded to the nearest rupee.
₹30,000 Last Drawn Salary
| Years Counted | Gratuity | Tax Position (private, covered) |
|---|
| 5 | ₹86,538 | Fully exempt |
| 10 | ₹1,73,077 | Fully exempt |
| 15 | ₹2,59,615 | Fully exempt |
| 20 | ₹3,46,154 | Fully exempt |
| 25 | ₹4,32,692 | Fully exempt |
| 30 | ₹5,19,231 | Fully exempt |
₹50,000 Last Drawn Salary
| Years Counted | Gratuity | Tax Position (private, covered) |
|---|
| 5 | ₹1,44,231 | Fully exempt |
| 10 | ₹2,88,462 | Fully exempt |
| 15 | ₹4,32,692 | Fully exempt |
| 20 | ₹5,76,923 | Fully exempt |
| 25 | ₹7,21,154 | Fully exempt |
| 30 | ₹8,65,385 | Fully exempt |
₹1,00,000 Last Drawn Salary
| Years Counted | Gratuity | Tax Position (private, covered) |
|---|
| 5 | ₹2,88,462 | Fully exempt |
| 10 | ₹5,76,923 | Fully exempt |
| 15 | ₹8,65,385 | Fully exempt |
| 20 | ₹11,53,846 | Fully exempt |
| 25 | ₹14,42,308 | Fully exempt |
| 30 | ₹17,30,769 | Fully exempt |
| 35 | ₹20,19,231 | Taxable above ₹20,00,000: ₹19,231 |
Next step: find your row, then compare it with the figure in your settlement letter. A gap of more than a few hundred rupees deserves a question to HR.
Taxation on Gratuity
Gratuity paid at exit is exempt up to the least of three amounts, and the ceiling for non-government employees is ₹20,00,000. Government employees are fully exempt. Gratuity received while you are still in service is fully taxable. These rules come from the Income Tax Department's retirement-benefits tutorial, updated for the Finance Act 2026.
Is Gratuity Taxable?
Partly, depending on who you are and when you receive it. Gratuity paid during service is fully taxable. At retirement, resignation or death it is exempt to the extent described below, and the excess is added to your salary income. The Income-tax Act, 2025 took over from the 1961 Act on 1 April 2026, and tax portals report that the gratuity exemption continues in substance.
Tax Exemption Limit for Private Employees
| Employer Type | Exempt Amount Is the Least Of |
|---|
| Covered under the gratuity law |
(a) (15 ÷ 26) × last drawn salary × completed years, with a part-year over six months counted as a full year
(b) ₹20,00,000
(c) Gratuity actually received |
| Not covered |
(a) Half a month's average salary (last 10 months) × completed years
(b) ₹20,00,000
(c) Gratuity actually received |
Tax portals describe the ₹20 lakh limit as an aggregate over all gratuity you receive from different employers, not a fresh limit per job.
Tax Exemption for Government Employees
Gratuity received by central and state government employees is fully exempt, with no rupee ceiling (Income Tax Department tutorial). Employees of statutory corporations are listed separately and follow the non-government rules above. Some pages mention a ₹25 lakh figure for government staff, which appears to be a service-rule payout ceiling rather than a tax limit.
When the ₹20 Lakh Limit Starts to Matter
Most people never reach it on the formula alone. This table shows how many counted years it takes for each salary level to cross ₹20,00,000 (covered employer):
| Basic + DA per Month | Years Counted to Cross ₹20 Lakh | Gratuity at That Point |
|---|
| ₹50,000 | Not in a normal career (70 years) | ₹20,19,231 |
| ₹1,00,000 | 35 | ₹20,19,231 |
| ₹1,50,000 | 24 | ₹20,76,923 |
| ₹2,00,000 | 18 | ₹20,76,923 |
| ₹3,00,000 | 12 | ₹20,76,923 |
| ₹5,00,000 | 7 | ₹20,19,231 |
Wages for the Labour Code vs Salary for Tax
The labour-code payout uses "wages" with the 50% floor. The tax exemption formula uses "last drawn salary including DA but excluding bonus, commission, HRA, overtime and any other allowance", as the Income Tax Department tutorial words it. If your employer pays on the higher wage base, our reading is that the formula leg of the exemption can be lower than the amount you receive, leaving a taxable slice even below ₹20 lakh. Confirm with a chartered accountant before you file.
Gratuity vs PF: Key Differences
Gratuity is a lump sum your employer pays for long service. Provident fund is a savings pot built from monthly contributions. They are separate benefits and you can receive both.
| Point | Gratuity | Provident Fund (EPF) |
|---|
| Who pays | Employer only | Employee and employer |
| When you get it | On exit after the qualifying service | Withdrawal as per EPF rules |
| Minimum service | Five years (exceptions apply) | None to start; five years for tax-free withdrawal |
| Tax at exit | Exempt up to the least-of-three amount | Exempt after five years; conditions apply otherwise |
Payment Source
The employer pays gratuity entirely. In an Employees' Provident Fund, both you and your employer contribute every month; the Income Tax Department tutorial treats employer contributions up to 12% of Basic + DA as exempt.
Eligibility Conditions
PF starts building from your first month of membership. Gratuity needs five years of continuous service, with the exceptions covered above.
Tax Treatment
Gratuity follows the least-of-three exemption rule. EPF withdrawal after five years of continuous service is exempt, while an early withdrawal from a recognised fund can lose that treatment (Income Tax Department tutorial).
Common Gratuity Calculator Mistakes to Avoid
Three input errors cause most wrong figures. Each one is easy to fix before you rely on the result.
Using gross salary instead of Basic + DA
Meera's gross is ₹78,000. Plugging that into the formula for 10 years gives ₹4,50,000, against the correct ₹2,42,308. The calculator would overstate her payout by ₹2,07,692. Use Basic + DA, then check whether the 50% rule lifts your base.
Ignoring the 6-month rounding rule
Two errors happen here. Some people round 6 years 6 months up to 7, which the law does not allow. Others forget to round 6 years 7 months up. Count months from your joining date to your last working day, not to your resignation date.
Assuming gratuity is always tax-free
It is exempt only within limits. Gratuity during service is fully taxable. Amounts above ₹20,00,000 are taxable. A non-covered employer's gratuity uses a different exemption formula, and the wage-base mismatch above can leave a small taxable slice.
How to Claim Your Gratuity and What to Do If It Is Delayed
Under Section 56 of the Code the employer must work out the amount and send you written notice as soon as gratuity becomes payable, even if you have not applied. In practice, apply in writing anyway so the clock is on record.
1Keep your appointment letter, resignation acceptance, relieving letter and last three payslips.
2Email a written claim to HR with your joining date, last working day and the figure from this calculator.
3Expect a reply within the 15 days set by the Social Security (Central) Rules, 2026 and payment within 30 days.
4If you hear nothing, send a reminder and note the date. Late payment attracts simple interest at a rate the Central Government notifies.
5Still unpaid? Approach the competent authority under the Code, usually the labour department's gratuity authority for your area. Get a lawyer's help if the employer disputes eligibility.
Get Your Gratuity Checked Before You Resign
A wrong assumption about the five-year line or the wage base can cost lakhs. If your relieving date is close to the cut-off, your salary has a low basic, or your employer disputes your claim, LegalDev India's team can review your documents and tell you where you stand. Employers can also ask about gratuity provisioning and payroll compliance.
Related Tools
Frequently Asked Questions
For a covered employer, gratuity is last drawn Basic + DA × 15 × years of service ÷ 26. Service beyond six months in the final year counts as a full year. For a non-covered employer the divisor is 30.
The Code on Social Security, 2020 asks for five years of continuous service. Its deeming rule for a 240-day working year has helped some employees in court, but results differ, so do not count on it. Check whether your employer's own policy is more generous.
Yes, if you have completed five years of continuous service with that employer. Resignation, retirement and superannuation all trigger payment. Leaving before five years gives no statutory gratuity, except on death or disablement.
Days you actually serve in the notice period are part of your employment, so they count. If you are released early or the notice is waived, your service ends on the relieving date, so check it carefully when you are close to the five-year line.
No. The base is "wages", which means Basic + DA, with the Code's 50% rule adding back excess allowances. HRA, bonus and overtime stay out unless the 50% rule pulls part of them in.
No. The employer pays gratuity. Some salary structures show a notional gratuity line inside CTC, but it is not taken from your take-home pay.
For private-sector employees the Income Tax Department's exemption ceiling is ₹20,00,000. Central and state government employees (other than statutory corporation staff) get full exemption.
Gratuity received while still in service is fully taxable. At exit, the exempt amount is the least of the formula amount, ₹20,00,000 and the gratuity actually received. Anything above that is taxed at your slab rate.
Yes. Since 21 November 2025, fixed-term employees qualify after one year of continuous service, paid pro rata. A contract that ends before one year gives no gratuity.
Section 56 of the Code gives thirty days from the date gratuity becomes payable. The Social Security (Central) Rules, 2026 add a fifteen-day window for the employer to accept or reject a written claim.
Only in narrow cases, such as dismissal for wilful damage to the employer's property, riotous or violent conduct, or an offence involving moral turpitude. Ordinary resignation or poor performance is not a ground.
Then gratuity is a matter of company policy or contract, usually worked out at 15 ÷ 30. The tax exemption formula also changes to half a month's average salary (last 10 months) per completed year.
Yes. Service does not carry over to a new employer, so each employer's five years are counted separately. Planning your exit date around the five-year mark can matter.
Gratuity is now governed by Chapter V of the Code on Social Security, 2020, in force since 21 November 2025. The 1972 Act's name still appears on payslips, policies and tax forms.