Gratuity Calculator
Estimate your gratuity under the Payment of Gratuity Act, 1972.
Estimate only. Not legal or tax advice — confirm with your employer's HR team.
How the 15/26 formula works
Under the Payment of Gratuity Act, 1972 — which applies to every establishment with 10 or more employees — gratuity is calculated as:
Gratuity = (Last drawn Basic + DA) × 15 × Years of service ÷ 26
The "15" represents 15 days' wages for each year of service. The "26" represents the number of working days the Act assumes in a month (30 days minus 4 weekly offs). Together, 15/26 works out to roughly half a month's salary per year — a useful sanity check on any figure this calculator gives you.
Only Basic salary plus Dearness Allowance counts — HRA, special allowance, performance bonuses, and other components are excluded from the base, even if they make up a large share of your total CTC.
Eligibility — the 5-year rule
Gratuity generally requires 5 years of continuous service with the same employer. There's a narrow, court-recognized exception: some High Courts have held that completing 4 years plus 240 working days in the 5th year satisfies the requirement — but this isn't universally applied, so don't rely on it without checking your specific situation.
Years of service are rounded for the calculation itself: 6 months or more of a partial year rounds up to a full year; less than 6 months rounds down.
Tax treatment
For employees covered by the Act, gratuity is tax-exempt under Section 10(10)(ii) up to ₹20 lakh — a ceiling raised from ₹10 lakh in 2018 and unchanged since. This same ₹20 lakh figure is also the statutory maximum payable under the Act itself. If an employer chooses to pay more as a goodwill gesture, the excess is treated as ex-gratia and taxed as regular salary income.
Employees not covered by the Act (smaller establishments, for instance) use a different formula based on the average salary of the last 10 months and a 30-day divisor instead of 26 — this calculator covers Act-covered employees only.
FAQ
Does DA apply to private-sector employees too?
Most private-sector companies don't structure salaries with a separate DA component — in that case, use your Basic salary alone as the input.
Can my employer deduct anything from my gratuity?
Amounts you owe the employer can generally be adjusted against your gratuity, but the deduction can't reduce the entitlement below what the Act guarantees for damage or loss caused by the employee, subject to specific conditions.