Gratuity Calculator: Calculate Your Gratuity Amount Online

GRATUITY CALCULATOR · SEC 10(10)

Gratuity Calculator

Calculate statutory gratuity payout and Section 10(10) tax exemptions.

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Yrs
Mos

Gratuity Summary

Total Calculated Gratuity
₹0
Tax-Free Exempt
₹0
Taxable Gratuity
₹0
Eligibility Status: —

This is an estimate for guidance only. Actual settlement depends on your employer’s policy and the Payment of Gratuity Act, 1972. Gratuity is capped at ₹20,00,000. Any ex-gratia amount paid above the statutory formula is fully taxable.

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If you have worked with the same employer for several years, gratuity is one of the biggest lump-sum benefits waiting for you at the end of your service. Yet most employees only think about it when they are about to resign or retire, by which time they often have no idea how the amount is even worked out.

A gratuity calculator removes that guesswork. Enter your last drawn basic salary and dearness allowance, add your total years of service, and you get an instant, accurate estimate of the gratuity amount you are entitled to receive, in line with the Payment of Gratuity Act, 1972. This guide walks you through the exact formula, eligibility rules, tax treatment, and the recent changes introduced under India’s new labour codes, so you know precisely what to expect before you ever open your final settlement letter.

What Is Gratuity?

Gratuity is a statutory, one-time lump-sum payment made by an employer to an employee as a reward for long and continuous service. It is not a bonus or an incentive; it is a legal right for eligible employees, governed in India by the Payment of Gratuity Act, 1972. The Act applies to every factory, mine, oilfield, plantation, port, railway company, shop, and establishment employing ten or more people.

Gratuity forms part of an employee’s Cost to Company (CTC), even though it is not paid out monthly. It is released as a lump sum when an employee leaves the organisation, whether through resignation, retirement, superannuation, layoff, or in the unfortunate event of death or disability.

Gratuity Calculator Formula

The formula used by any gratuity calculator online depends on whether your employer is covered under the Payment of Gratuity Act, 1972.

Formula for Employees Covered Under the Act

Gratuity = (Last Drawn Salary × 15 × Number of Years of Service) ÷ 26
Here:

  • Last Drawn Salary means your basic pay plus dearness allowance (DA). Other components such as HRA, bonus, and special allowances are excluded.
  • 15 represents 15 days of wages for every completed year of service.
  • 26 is the assumed number of working days in a month, since Sundays are typically excluded.
  • If your service in the final year exceeds six months, it is rounded up to the next full year. For example, 9 years and 7 months is treated as 10 years, while 9 years and 4 months remain 9 years.

Example: If your last drawn basic salary plus DA is ₹40,000 and you have completed 8 years of service: Gratuity = (40,000 × 15 × 8) ÷ 26 = ₹1,84,615 (approximately)

Formula for Employees Not Covered Under the Act

Some smaller establishments with fewer than ten employees fall outside the Act, but many still choose to pay gratuity voluntarily. In that case, a slightly different gratuity calculator formula applies:
Gratuity = (Last Drawn Salary × 15 × Number of Years of Service) ÷ 30
Here, 30 is used instead of 26 because the calculation does not exclude weekly offs. Also, only completed years of service are counted, unlike the rounding-up rule under the Act.
Example: For a last drawn salary of ₹30,000 and 7 years of service under this formula: Gratuity = (30,000 × 15 × 7) ÷ 30 = ₹1,05,000

How to Use an Online Gratuity Calculator

Using a gratuity amount calculator takes less than a minute if you have these two details ready:

How to Use an Online Gratuity Calculator
  • Enter your last drawn basic salary plus DA. This is the figure your gratuity is based on, not your total monthly take-home salary.
  • Enter your total years of service with your current employer, in years and months.
  • Select whether your organisation is covered under the Payment of Gratuity Act, 1972. Most private companies with 10 or more employees are covered.
  • View your result instantly. The calculator applies the correct formula (15/26 or 15/30) and shows your estimated gratuity payout.

Because the calculation involves specific rounding rules that are easy to get wrong manually, using an online gratuity calculator is far more reliable than doing the maths by hand.

Gratuity Eligibility Calculator: Who Qualifies?

Not every employee automatically qualifies for gratuity. Under the Payment of Gratuity Act, 1972, you are eligible if:

  • You have completed at least 5 years of continuous service with the same employer.
  • You are leaving due to retirement or superannuation.
  • You resign after completing the minimum service period.
  • You become permanently disabled due to an accident or illness (the 5-year rule does not apply here).
  • You pass away while in service, in which case gratuity is paid to your nominee or legal heir, again without the 5-year condition applying.

A useful clarification many competing gratuity eligibility calculators miss: courts have generally interpreted “continuous service” to include an employee who has completed 4 years and 240 days in the final year, effectively treating it as the equivalent of 5 years for gratuity purposes. This interpretation can vary by employer policy and jurisdiction, so it is always worth checking your appointment letter and HR policy.

Gratuity Calculator for Private Employees in India

Private sector employees form the largest group using an employee gratuity calculator, and their treatment differs slightly from government employees:

  • Coverage: Most private employers with 10 or more staff fall under the Payment of Gratuity Act, 1972.
  • Formula: The standard 15/26 formula applies for covered private employers; the 15/30 formula applies for smaller, non-covered establishments.
  • Cap: The maximum tax-exempt gratuity amount for private sector employees is currently ₹20 lakh. Any amount paid above this is treated as ex-gratia and is fully taxable.
  • Payment timeline: Employers are legally required to pay gratuity within 30 days of it becoming due. Delayed payment attracts interest.

Retirement Gratuity Calculator: Government Employees

Government employees, including those in Central and State Government service and Public Sector Undertakings, are governed by separate pension and retirement gratuity rules rather than solely the Payment of Gratuity Act. For most government employees:

  • Gratuity received on retirement or death is fully exempt from income tax, regardless of the amount.
  • The calculation is often based on the Central Civil Services (Pension) Rules rather than the private-sector formula, though the underlying principle of last drawn salary multiplied by years of service still applies.
  • A retirement gratuity calculator for government staff typically also accounts for Dearness Allowance revisions applicable at the time of retirement.

Gratuity Calculator New Rules: What Changed Under the New Labour Codes

If you searched for a “new gratuity calculator” or “gratuity calculator new rules,” this is the update you are likely looking for. India’s four labour codes, including the Code on Social Security, 2020, which subsumes the Payment of Gratuity Act, 1972, were notified as effective law on 21 November 2025. Full central and state-level enforcement is expected to be completed through 2026 as state governments finalise their own rules.
Here is what the new framework changes:

New definition of “wages”

 Basic pay plus dearness allowance plus retaining allowance must now make up at least 50% of total CTC. If allowances like HRA and special pay exceed 50% of CTC, the excess is treated as wages for the purpose of calculating gratuity, PF, and other statutory dues.

Higher gratuity payouts

Because many companies previously kept basic pay artificially low, this rule change is expected to raise the gratuity calculation base significantly, in some cases increasing payouts by a wide margin for long-tenured employees.

Gratuity for fixed-term employees

Under the earlier law, only employees with 5 years of continuous service qualified. Now, fixed-term (contract) employees are entitled to pro-rata gratuity after just 1 year of continuous service. The traditional 5-year rule still applies to permanent employees.

Faster settlements

Full and final settlement of dues, including gratuity, is now expected to be completed much faster after an employee’s exit, compared to the earlier 30 to 45-day norm.

Gratuity Calculator: Covered vs Not Covered, at a Glance

Because implementation timelines differ by state, it is worth checking your own state’s notified rules, or asking your HR team whether your organisation has already restructured salaries in line with the 50% wage rule. This is also why using an updated gratuity calculator online, rather than relying on an old spreadsheet, matters more than ever in 2026.

ParticularsEmployer Covered Under the ActEmployer Not Covered Under the Act
Formula(Salary × 15 × Years) ÷ 26(Salary × 15 × Years) ÷ 30
Rounding of serviceOver 6 months rounded up to next yearOnly completed years counted
Minimum service required5 years (1 year for fixed-term staff under new rules)5 years, generally
Maximum tax-free amount₹20 lakh₹20 lakh
Governing lawPayment of Gratuity Act, 1972 (now under the Code on Social Security, 2020)Company policy, voluntarily aligned to the Act

Tax Treatment of Gratuity in India

Whether your gratuity amount is taxable depends on your employment category:

  • Government employees: Gratuity is fully exempt from income tax, with no upper limit.
  • Private employees covered under the Act: The exemption is the lowest of the following three amounts: the actual gratuity received, ₹20 lakh, or the amount calculated using the statutory formula.
  • Private employees not covered under the Act: A similar exemption applies, though the computation uses the 15/30 formula and an average of the last 10 months’ salary rather than the last drawn salary alone.

Any amount received above the exempt limit is added to your taxable income under the head “Income from Salary” and taxed at your applicable slab rate.

Why Use an Online Gratuity Calculator

Manually working out gratuity means juggling rounding rules, choosing the correct divisor, and remembering the tax-exemption ceiling, and a small error can throw off your entire retirement or resignation planning. An online gratuity calculator gives you:

  • Instant, error-free results based on the correct 15/26 or 15/30 formula.
  • Clarity on eligibility before you plan a resignation or retirement date.
  • A clearer picture for financial planning, so you know how much of your gratuity is tax-free and how much to factor into your savings goals.

Gratuity is usually just one part of a larger financial picture. Once you know your expected payout, it helps to plan where that lump sum will go. If you are looking to grow it steadily, our Fixed Deposit Calculator shows how much your gratuity amount could earn over a fixed tenure, while the PPF Calculator is useful if you want to route part of it into a long-term, tax-free retirement corpus. If you would rather invest it through mutual funds, the Step-Up SIP Calculator can help you see how a lump-sum gratuity payout combined with a growing monthly SIP compounds over time.

Gratuity planning often overlaps with other financial calculations too. If your employer’s gratuity liability is affecting salary restructuring under the new wage rules, our Compound Interest Calculator can help you understand how your retirement corpus grows over the years. And if you are managing a loan alongside your retirement planning, whether to close it early using part of your gratuity or continue paying it off, the EMI Calculator can help you compare both scenarios. Business owners and freelancers settling employee dues, including gratuity-linked payouts, may also find our GST Calculator useful for related invoicing and compliance calculations.

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Frequently Asked Questions

A gratuity calculator is an online tool that estimates the lump-sum amount an employee is entitled to receive from their employer after completing a minimum period of continuous service, based on the Payment of Gratuity Act, 1972.

For employees covered under the Act, gratuity is calculated as (Last Drawn Salary × 15 × Years of Service) ÷ 26. For employees not covered under the Act, the divisor changes to 30.

Generally, 5 years of continuous service is required. This does not apply in cases of death or permanent disablement. Under the new labour codes, fixed-term employees qualify after just 1 year of continuous service.

Gratuity is calculated on your last drawn basic salary plus dearness allowance (DA) only. Components like HRA, bonus, and special allowances are excluded.

Currently, the maximum tax-exempt gratuity amount for private sector employees is ₹20 lakh. Amounts above this are taxable as per your income tax slab. Government employees enjoy full tax exemption with no cap.

Yes, in cases of death or permanent disablement due to accident or disease, the 5-year eligibility rule does not apply. Fixed-term employees are also now eligible after 1 year under the new labour codes.

Yes, gratuity is typically included as a component of your Cost to Company, even though it is paid out only at the time of exit, not monthly.

Employers are required to pay gratuity within 30 days from the date it becomes payable. Delays attract simple interest on the outstanding amount.

Potentially, yes. Since the new wage definition requires basic pay plus DA to be at least 50% of CTC, the base used to calculate gratuity increases for many employees, which can result in a higher payout compared to the earlier salary structure.

Conclusion

Gratuity is a legally protected reward for loyalty and long service, and understanding exactly how it is calculated puts you in a much stronger position, whether you are planning a resignation, approaching retirement, or simply reviewing your CTC breakup. Use the gratuity calculator above to get an instant estimate based on your salary and tenure, and keep an eye on how your state’s implementation of the new labour codes may affect your final payout in the months ahead.