Gratuity Calculator
Gratuity amount, eligibility and tax-free limit.
Employment type
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Enter your numbers to see the result.
This gratuity calculator works out how much gratuity you are entitled to when you leave a job or retire. Enter your last drawn basic pay and DA, your length of service and whether your employer is covered by gratuity law. It applies the 15/26 or 15/30 formula, rounds service correctly, checks eligibility including the one-year rule for fixed-term employees, and shows how much is tax-free.
What is a Gratuity Calculator?
Gratuity is a lump sum an employer pays to an employee as a thank-you for long service. It is paid when you resign, retire, are laid off, or in case of death or disablement. Organisations with 10 or more employees are covered by gratuity law, now part of the Code on Social Security, 2020, which came into force with the new labour codes in November 2025.
Permanent employees usually become eligible after 5 years of continuous service. Under the labour codes, fixed-term employees qualify after just one year. A gratuity calculator applies the official formula to your last salary and service so you know what to expect in your full and final settlement.
How does the Gratuity Calculator work?
For covered employers, gratuity is 15 days’ wages for every year of service, with a month treated as 26 working days. A part year of more than six months counts as a full year.
For employers not covered, the usual practice is 15 days’ wages per completed year, with a month treated as 30 days. Gratuity up to ₹20 lakh is tax-free for private employees; government employees’ gratuity is fully exempt.
How to use the Gratuity Calculator step by step
- Enter your last drawn monthly basic pay plus DA.
- Enter your years and extra months of service.
- Choose your employer type.
- Choose permanent or fixed-term employment.
- Read the gratuity amount and the tax-free part.
- Keep the result handy for your exit discussion.
Gratuity Calculator example with real numbers
You resign after 8 years and 7 months with a company covered by gratuity law. Your last basic pay plus DA was ₹50,000 a month.
| Example input | Value |
|---|---|
| Last drawn monthly basic + DA | ₹50,000 |
| Years of service | 8 years |
| Extra months | 7 months |
| Employer type | Covered by gratuity law (10+ employees) |
| Employment type | Permanent |
| Example output | Value |
|---|---|
| Gratuity payable | ₹2,59,615 |
| Service counted | 9 years (6+ months rounded up) |
| Formula | Basic × 15/26 × years |
| Tax-free amount | ₹2,59,615 |
| Taxable amount | ₹0 |
| Legal maximum (private sector) | ₹20,00,000 |
Because the extra 7 months are more than six, your service counts as 9 years. The gratuity calculator works out ₹50,000 × 15/26 × 9 = ₹2,59,615, and all of it is tax-free as it is below ₹20 lakh.
Key features of this Gratuity Calculator
- 15/26 and 15/30 formulas
- 6-month rounding rule
- 5-year and 1-year (fixed-term) eligibility check
- Tax-free limit of ₹20 lakh
- Government employee option
Who should use the Gratuity Calculator?
Who is this Gratuity Calculator for?
- Employees planning to resign or retire
- Fixed-term and contract employees
- HR and payroll teams preparing settlements
- Employees comparing job offers with long-term benefits
Practical use cases
- Checking your gratuity before resigning
- Seeing if 4 years and 7 months qualifies
- Estimating gratuity at retirement
- Checking a full and final settlement
Key benefits
- Know your due: spot errors in the settlement.
- Timing decisions: see the effect of staying a few more months.
- Current rules: fixed-term eligibility under the labour codes.
- Tax clarity: taxable and exempt parts shown.
Tips for better results
- If you are close to completing more than six months in a year, staying a little longer can add a full year to your gratuity.
- Check that your employer counts DA and any other components that form part of wages.
- Under the labour codes, wages generally must make up at least half of total pay, which may increase gratuity for some employees.
- Keep your appointment and relieving letters as proof of service.
Common mistakes to avoid
- Using CTC or gross salary instead of basic plus DA.
- Assuming 4 years 6 months is enough for permanent employees in every case.
- Forgetting that the ₹20 lakh tax limit is a lifetime limit.
- Not claiming gratuity within 30 days of it becoming payable.
Limitations of this Gratuity Calculator
- It uses the last drawn salary you enter; average salary rules for some piece-rated workers are not modelled.
- Courts have differed on whether 4 years 240 days counts as 5 years; check with your employer.
- Employer policies more generous than the law are not modelled.
Gratuity Calculator vs other ways to calculate
| Situation | Formula | Eligibility |
|---|---|---|
| Covered employer, permanent employee | Basic × 15/26 × years | 5 years |
| Covered employer, fixed-term employee | Basic × 15/26 × years | 1 year (labour codes) |
| Employer not covered | Basic × 15/30 × completed years | As per company policy |
| Death or disablement | Same formula | No minimum service |
Gratuity is one part of retirement savings. Add it to your EPF using the EPF calculator and check the total against the retirement calculator.
Privacy and data handling
This Gratuity Calculator runs entirely in your browser. The numbers you type are not sent to Qorico or stored on any server, and nothing is saved after you close the page. The Copy and Download buttons create the result on your own device. If the page has analytics turned on, it may count that a calculation happened, but it does not record the values you entered.
Gratuity Calculator FAQs
What is the gratuity formula?
For covered employers: last basic plus DA × 15 ÷ 26 × years of service. A part year above six months counts as a full year.
Am I eligible for gratuity after 4 years 240 days?
Some court rulings have treated 4 years and 240 days of work as 5 years of continuous service, but practice varies. Check with your employer or HR.
Is gratuity taxable?
Gratuity up to ₹20 lakh is tax-free for non-government employees, as a lifetime limit. Government employees’ gratuity is fully exempt.
What changes under the new labour codes?
Fixed-term employees become eligible after one year of service, and the wider definition of wages may raise gratuity for some employees.
How much gratuity for 10 years on ₹40,000 basic?
₹40,000 × 15 ÷ 26 × 10 = about ₹2,30,769 for a covered employer.
When must gratuity be paid?
Within 30 days of it becoming payable. Delays can attract interest under the law.
Related tools
Sources and references
We checked the method and the current figures used in this Gratuity Calculator against these official and primary sources:
- Ministry of Labour and Employment
- Code on Social Security, 2020 (India Code)
- Income Tax Department of India
Written and reviewed by the Qorico Team
