Leaving a job or retiring? Estimate the gratuity your employer owes you — based on your last drawn basic + DA and years of service.
Gratuity Calculator
Formula: 15 × last salary × years ÷ 26 (covered) or ÷ 30 (not covered). Eligibility: 5 years of continuous service; 1 year for fixed-term employees under the new labour codes. Tax-free up to ₹20 lakh for private employees.
Gratuity formula
- Covered under the Act: 15 × last drawn salary × years of service ÷ 26
- Not covered: 15 × last drawn salary × completed years ÷ 30
- Salary means basic pay plus dearness allowance
- Rounding: if the final year has more than 6 months, it counts as a full year (for covered employers)
Frequently asked questions
Who is eligible for gratuity?
Permanent employees become eligible after 5 years of continuous service. Under the new labour codes, fixed-term employees qualify after 1 year. In case of death or disability, there is no minimum service.
Is gratuity taxable?
For private-sector employees, gratuity up to ₹20 lakh (lifetime) is tax-free. Government employees get a ₹25 lakh exemption. Anything above is taxed at your slab rate.
Why does the formula divide by 26?
It assumes 26 working days in a month, so 15 days’ wages are paid for every year of service.