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Gratuity Calculator India

Estimate the gratuity amount you are entitled to receive at the time of leaving your job or retirement after 5 years of service.

Gratuity Estimate

Last Basic Salary + DA (Monthly)₹50,000
₹50,000
Years of Service5 Years
5 Yrs
Estimated Gratuity

₹1,44,231

You are eligible!

Based on 5 years of service, you have qualified for gratuity under the Payment of Gratuity Act, 1972.

Calculation Formula:(Basic + DA) × (15/26) × Years

The maximum tax-free gratuity limit is currently ₹20 Lakhs (likely to be increased to ₹25 Lakhs soon). Excess amount is taxable.

The Payment of Gratuity Act, 1972

Gratuity is one of the most important components of your retirement or resignation benefits. It is a lump sum amount paid by the company as a token of appreciation for your long-term association.

5-Year Rule

Mandatory continuous service of 5 years is required to qualify for the benefit.

Tax Exemption

Up to ₹20 Lakhs of gratuity is tax-free for private and government employees.

Universal App

Applies to factories, mines, oilfields, plantations, ports, railways, and shops.

How Gratuity is Calculated?

While calculating the number of years of service, any period more than 6 months is rounded off to the next year. For example, if you have served for 6 years and 7 months, the tenure will be considered 7 years.

  • Step 1: Identify your last drawn Basic Salary and Dearness Allowance (DA).
  • Step 2: Multiply this sum by 15.
  • Step 3: Multiply the result by your total years of service.
  • Step 4: Divide the final amount by 26.

Frequently Asked Questions

What is Gratuity?

Gratuity is a monetary benefit given by an employer to an employee in recognition of their long and faithful service. It is governed by the Payment of Gratuity Act, 1972.

Who is eligible for Gratuity?

An employee is eligible for gratuity if they have completed 5 years of continuous service with the same employer. This limit is not applicable in case of death or disablement.

How is Gratuity calculated?

The formula is (Last Drawn Basic Salary + DA) * 15/26 * Number of years of service. Here, 26 is considered as the number of working days in a month, and 15 is the number of days for which gratuity is paid for every year of service.

Is there a maximum limit for Gratuity?

Yes, the maximum tax-free gratuity that an employer can pay is ₹20 Lakhs as per the latest government rules (2026). Any amount exceeding this is taxable.

Does Gratuity apply to contract employees?

Yes, if a contract employee is considered an 'employee' of the organization and completes 5 years of continuous service, they are entitled to gratuity.