Is 5 years strictly required?

Yes for resignation. The 5-year requirement is waived on death or permanent disability of the employee.

Gratuity up to ₹20 lakh is tax-free for non-government employees. Amounts above this are taxed as salary.

How are partial years counted?

More than 6 months in the final year rounds up to a full year. Less than 6 months is dropped.

Are contract employees eligible?

Yes — if they complete 5 years of continuous service with the same employer, regardless of contract type.

Finance

Gratuity Calculator

Calculate gratuity payable under the Payment of Gratuity Act using the standard 15/26 formula.

Last drawn basic + DA (monthly)

₹

₹ 5,000₹ 5,00,000

Years of service

yrs

0 yrs45 yrs

Minimum 5 years required to be eligible.

Gratuity payable

₹2,01,923

Years counted: 7
Tax-free cap: ₹20,00,000

What is Gratuity?

Gratuity is a lump sum employers pay employees who have completed at least 5 years of continuous service, on resignation, retirement or termination. It is governed by the Payment of Gratuity Act, 1972.

Formula

For employees covered under the Act:

Gratuity = (15 × Last salary × Years of service) / 26

Last salary = Basic + DA
15 = days of salary per completed year
26 = working days in a month

How to use this calculator

Enter your last drawn monthly basic + DA and total years of completed service. Service of 6 months or more in the final year is rounded up. Gratuity up to ₹20 lakh is tax-free.