Gratuity calculator (India)
Gratuity is a lump sum an employer pays on leaving after long service. This calculator estimates it under the standard formulas.
How to use this calculator
- Enter your last drawn monthly basic plus dearness allowance.
- Enter your years of service and any extra months.
- Choose whether your employer is covered by the Payment of Gratuity Act.
- Read the gratuity and the part that is within the tax-free ceiling.
Worked examples
Example 1
A last drawn basic plus DA of ₹60,000, 12 years 8 months of service, employer covered by the Act.
You enter
| Last drawn monthly basic plus dearness allowance | ₹60,000 |
|---|---|
| Years of service | 12 |
| Extra months | 8 |
| Your employer | Covered by the Payment of Gratuity Act |
| Tax-free ceiling | ₹20,00,000 |
You get
| Years counted | 13 |
|---|---|
| Gratuity | ₹4,50,000 |
| Of which tax-free (up to the ceiling) | ₹4,50,000 |
Example 2
The same pay and service for an employer not covered.
You enter
| Last drawn monthly basic plus dearness allowance | ₹60,000 |
|---|---|
| Years of service | 12 |
| Extra months | 8 |
| Your employer | Not covered by the Act |
| Tax-free ceiling | ₹20,00,000 |
You get
| Years counted | 12 |
|---|---|
| Gratuity | ₹3,60,000 |
| Of which tax-free (up to the ceiling) | ₹3,60,000 |
How it works
For covered employers the formula uses 15 days' wages for every completed year, with a month taken as 26 working days. A part year of six months or more counts as a full year.
Gratuity generally needs at least five years of continuous service (with exceptions such as death or disability), and the tax-free ceiling is set by law and can change. Check the current rules or your HR.
Formula
Covered: gratuity = last drawn salary x 15 / 26 x years of service. Not covered: last drawn salary x 15 / 30 x completed years.
Common questions
What salary is used?
Basic plus dearness allowance, not the full package.
Is gratuity taxable?
Part is exempt up to the ceiling for eligible employees; check current tax rules.
What if I worked 4 years 8 months?
Eligibility usually needs five years; there are exceptions.
Learn more
Read the lesson Tax basics and good records on pusaram.com for the ideas behind this calculator.
Calculators give estimates for learning and planning. They are not financial, tax, legal or medical advice, and results depend entirely on the numbers you enter. Check rates, limits and rules with an official source or a qualified professional before acting.