Gratuity Calculator — 15 days’ pay for every year of service
Gratuity is a lump sum your employer pays when you leave after five years. Enter your last basic + DA and how long you have worked to see the amount, and how much of it is tax-free.
Up to ₹20,00,000 over your whole career is tax-free for private-sector employees. Your employer’s letter decides the exact figure.
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Under the Payment of Gratuity Act, gratuity is 15 days of wages for each year of service, with a month counted as 26 working days. Wages are your last basic + DA — and since the labour codes took effect on 21 November 2025, at least half of your total pay.
A last part-year of more than six months counts as a full year. If your employer is not covered by the Act, it is half a month’s wages (15/30) for each completed year only.
You become eligible after five years of continuous service; on a fixed-term contract, after one year. For private-sector employees, up to ₹20 lakh of gratuity over a whole career is tax-free.
Gratuity = last monthly wages × 15 × years ÷ 26 (covered by the Act) Gratuity = last monthly wages × 15 × completed years ÷ 30 (not covered) Tax-free: up to ₹20 lakh (private sector, lifetime)
Questions
Who is eligible for gratuity?
Employees with five years of continuous service with the same employer, or one year on a fixed-term contract. The five-year rule does not apply on death or disability.
Is gratuity calculated on basic or gross salary?
On basic + DA. Under the labour codes, if those are less than half your total pay, the difference is added back, so wages are at least 50% of pay.
Is gratuity taxable?
For private-sector employees, up to ₹20 lakh over a career is exempt; anything above is taxed at your slab. Government employees have a higher limit.
When is gratuity paid?
Employers must pay within 30 days of it becoming due, when you resign, retire or are laid off after becoming eligible.
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