Am I eligible for gratuity?

Generally, yes, after 5 years of continuous service with the same employer, at establishments with 10 or more employees. The 5-year requirement is waived in cases of death or disability. Since India's new labour codes took effect in November 2025, fixed-term employees are also eligible for gratuity on a pro-rata basis after just 1 year of continuous service — a separate, shorter path from the 5-year rule for permanent employees. Check your specific employment terms and the latest notified rules, since some details were still being finalized at the time of writing.

How are years of service rounded?

A completed year with more than 6 months of service in the final year rounds up to the next full year; 6 months or less rounds down. Someone with 7 years 8 months of service is treated as 8 years; someone with 7 years 4 months is treated as 7.

For private-sector employees covered under the Act, gratuity is tax-exempt up to ₹20,00,000 (the limit is set by government notification and has changed before, so confirm the current figure). Government employees receive full tax exemption. Any amount above the exemption limit is taxed as salary income.

What if my employer isn't covered under the Gratuity Act?

A different formula applies: (Last drawn salary × 15 × completed years of service) ÷ 30, using actual days in a month rather than the Act's 26-day convention, and years of service aren't rounded the same way. This calculator uses the Act's formula, which covers most organized-sector employers.

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Gratuity Calculator

Estimate the gratuity you're entitled to under India's Payment of Gratuity Act, from your last drawn salary and years of service.

Last drawn basic salary + DA (monthly)₹50,000

Completed years of service8 Years

Gratuity amount

₹2,30,769

Fully tax-exempt under the current ₹20,00,000 limit.

For employees covered under the Payment of Gratuity Act, 1972. The exemption limit is set by government notification and can change — confirm the current figure before relying on this for a tax decision.

What is a gratuity calculator?

Gratuity is a lump-sum payment an employer makes to an employee as a reward for long, continuous service — typically paid at resignation, retirement, or termination after at least 5 years with the same employer. A gratuity calculator estimates this amount from your last drawn salary and years of service, using the formula set out in the Payment of Gratuity Act, 1972.

It isn't a savings account you contribute to — it's a statutory entitlement funded by the employer (often through a gratuity insurance policy), separate from your EPF balance, your own investments and any bonus.

How is gratuity calculated?

For employees covered under the Act:

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

"Last drawn salary" means basic pay plus dearness allowance, not your full CTC. A ₹50,000 monthly basic+DA with 8 completed years of service works out to about ₹2,30,769. Years of service are rounded: more than 6 months in the final year rounds up to the next full year, 6 months or less rounds down — 12 years 7 months is treated as 13 years, 12 years 4 months as 12.

Benefits of knowing your gratuity

Plan a job change

Knowing what you'd leave behind in unvested gratuity helps weigh the real cost of switching employers before 5 years.

Retirement planning input

Gratuity is a real, predictable lump sum — worth including alongside EPF and your own investments when estimating your retirement corpus.

Negotiation context

Understanding how gratuity accrues with tenure clarifies what a counteroffer with a shorter notice period or tenure actually costs you.

Tax planning

Knowing whether your gratuity will exceed the exemption limit helps you plan for the tax on the amount above it.

LessonRetirement Planning — Turn a distant, abstract goal into a practical, numbers-based savings system.
CalculatorRetirement Calculator — The corpus a fixed monthly investment builds by the time you retire.

Common questions

For employees covered under the Payment of Gratuity Act, 1972: Gratuity = (Last drawn basic salary + DA) × 15 × completed years of service ÷ 26. The 26 represents working days in a month under the Act's convention, and 15 represents 15 days' wages per year of service.