Gratuity Calculator
Calculate gratuity under the Payment of Gratuity Act from last drawn Basic+DA and years of service, with the tax-free limit.
How it works
Gratuity = (15 ÷ 26) × last drawn monthly Basic+DA × years of service — a year of service means 15 days of pay, and 26 is the assumed working days in a month
Under the Payment of Gratuity Act an employee who completes at least five years with a covered employer is paid gratuity of 15 days of the last drawn Basic+DA for each year of service, where a month is taken as 26 working days. Any part-year of six months or more is rounded up to a full year, so service is counted in whole years. The amount is tax-free up to a ceiling of ₹20 lakh across your career, and anything above that is added to taxable income.
Worked example
For a last drawn Basic+DA of ₹50,000 and 10 years of service, gratuity is (15 ÷ 26) × 50,000 × 10 = about ₹2,88,462 — comfortably within the ₹20 lakh tax-free limit, so none of it is taxed.
Frequently asked questions
Why divide by 26 in the formula?
The Act treats a month as 26 working days, so 15 days of pay is 15 ÷ 26 of the monthly Basic+DA. Multiplying that by years of service gives the 15-days-per-year benefit the law provides.
Do I need five years to get gratuity?
Generally yes — you must complete at least five years of continuous service to be eligible, though this is waived if service ends due to death or disablement. Below five years no gratuity is normally payable under the Act.
How much gratuity is tax-free?
For employees covered by the Act the exemption is capped at ₹20 lakh over your working life. Gratuity up to that limit is tax-free; any amount above it is added to your income and taxed at your slab rate.
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Educational estimate only, not tax advice. Gratuity, HRA and income-tax rules change with each Union Budget and depend on your exact salary structure and tax regime. Confirm with a qualified tax professional.