Gratuity is a legal thank-you payment from your employer when you leave after at least five years of service, and many employeesleave money on the table simply because they have never calculated it. This gratuity calculator applies the Payment of Gratuity Act, 1972 formula — 15/26 × last drawn monthly salary × completed years of service — and shows your exact entitlement in seconds.
Enter your basic salary (plus dearness allowance if applicable) and your tenure, and the tool returns the statutory gratuity amount..salary If your employer is not covered by the Act, an alternate formula of half a month's salary per completed year applies — this calculator handles the Act-covered standard case most Indian employees need.
Last updated: November 2026.
| Rule | What it means |
|---|---|
| Eligibility | Minimum 5 years of continuous service (4 years 240 days counts per court view) |
| Formula | 15/26 × last drawn salary (basic + DA) × completed years of service |
| Cap | Currently ₹20 lakh tax-free ceiling under the Act |
| Coverage | Factories, mines, offices and establishments with 10+ employees |
| Timeline | Employer must pay within 30 days of it becoming due |
Under the Payment of Gratuity Act: (15 × last drawn monthly salary × completed years of service) ÷ 26, where salary means basic pay plus dearness allowance. Example: 10 years of service and ₹30,000 basic + DA gives 15/26 × 30,000 × 10 = ₹1,73,077.
After five years of continuous service with covered employers. A widely accepted reading of the Supreme Court judgment counts 4 years and 240 days of service as eligible — since you effectively complete the 5th year of work within that duration.
Gratuity received by private-sector employees covered under the Act is exempt from income tax up to ₹20 lakh (the ceiling was raised by Finance Acts; amounts beyond the cap are taxed as income from salaries). Government employees enjoy full exemption on their gratuity.
Apply in writing within 30 days of it becoming due, and escalate to the Controlling Authority (Labour Commissioner) under Section 15 — claims can be filed until 90 days after the due date with condonation for delay. Interest applies on delayed payments.
Yes, they are separate entitlements: gratuity flows from the gratuity law; leave encashment is payable for accumulated earned leave under your employer policy/FBA rules (leave encashment on retirement is tax-exempt for government employees; private employees get relief up to specified limits).
Yes — resignation, retirement, termination (except for misconduct under Section 4(1)(a)) and superannuation all trigger gratuity for eligible tenured employees.