Gratuity Calculator

Estimate the gratuity your employer will pay when you resign, retire or complete a fixed-term contract. Enter your last drawn basic salary plus DA and your service period.

Gratuity Amount

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How to use the Gratuity Calculator

Enter your last drawn basic salary plus dearness allowance per month.
Enter your total years and months of continuous service.
Choose whether your employer is covered by the gratuity law (most companies with 10+ employees are).
Choose permanent or fixed-term employment to check eligibility.

Gratuity formula

Covered employer: Gratuity = 15 × last wages × years of service ÷ 26 Not covered: 15 × average wages × completed years ÷ 30

Here 15 means 15 days of wages for each year, and 26 is the number of working days in a month. For covered employers, a final part-year of more than 6 months counts as a full year.

Worked example

Basic + DA ₹60,000; service 12 years 7 months; covered employer

7 months is more than 6, so service = 13 years

Gratuity = 15 × 60,000 × 13 ÷ 26 = ₹4,50,000

Fully tax-free, as it is below ₹20 lakh

New labour code changes

The Code on Social Security, in force from 21 November 2025, keeps the 5-year rule for permanent employees but lets fixed-term employees claim gratuity after just one year of continuous service. The Code on Wages also requires basic pay plus DA to be at least 50% of total pay; where an employer had kept basic pay low, the gratuity base — and so the payout — rises. There is no minimum service requirement on death or disablement.

Tax on gratuity

For private-sector employees, gratuity is tax-free up to a lifetime total of ₹20 lakh across all employers; anything above is added to income and taxed at slab rates. Gratuity received by central and state government employees is fully exempt.

Tips

Use the basic + DA from your latest payslip, not your CTC.
Employers must pay gratuity within 30 days of it becoming payable.
Notice period served counts as service.
Keep your appointment and relieving letters as proof of service dates.

Frequently Asked Questions

15 × last basic + DA × years of service ÷ 26 for employers covered by the gratuity law.

Permanent employees generally need 5 years; some courts have accepted 4 years 240 days. Fixed-term employees need only 1 year.

Up to ₹20 lakh in a lifetime is tax-free for private-sector employees; government employees' gratuity is fully exempt.

Many companies show it in CTC, but it is paid only on leaving after the qualifying service.

Yes. Under the new labour code, fixed-term employees qualify after one year of continuous service.

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Content reviewed by Vinod, Easy Smart Calculator · Last updated October 2026