Gratuity Calculator India — Instant & Free
Updated: 3 June 2026 | Payment of Gratuity Act, 1972 | Formula: (Salary × 15 × Years) ÷ 26
A gratuity calculator computes the amount payable when an employee leaves after 5+ years of service. The formula is (Last drawn basic+DA × 15 × years of service) ÷ 26. Gratuity up to ₹20 lakh is tax-exempt under the Income-tax Act, 2025. Enter your last salary and years below for an instant calculation.
₹20,00,000
Maximum tax-exempt gratuity limit under the Income-tax Act, 2025. Gratuity above this amount is taxable as salary income in the Tax Year of receipt.
Gratuity Calculator
Basic salary + Dearness Allowance only — not gross salary
6+ months in last year counts as 1 full year
How Is Gratuity Calculated? — Formula Explained
Gratuity Formula (Payment of Gratuity Act, 1972):
Gratuity = (Last Drawn Basic + DA) × 15 × Years of Service ÷ 26
- 15 = 15 days' salary for each completed year of service
- 26 = working days in a month (excluding 4 Sundays)
- Years of service = rounded up if last year has 6+ months completed
- Last drawn salary = Basic + DA only (not HRA, allowances, or gross)
Worked Example
| Detail | Value |
|---|---|
| Last Basic + DA (monthly) | ₹50,000 |
| Years of service | 10 years |
| Gratuity = (50,000 × 15 × 10) ÷ 26 | ₹2,88,461 |
| Tax-exempt limit | ₹20,00,000 |
| Taxable gratuity (excess above ₹20L) | ₹0 (within limit) |
Gratuity Tax Exemption — How It Works
Gratuity received is tax-exempt up to the least of these three:
- Actual gratuity received
- ₹20,00,000 (maximum exemption under Income-tax Act, 2025)
- Formula amount: (15 × Last Salary × Years) ÷ 26
Only the excess over the exempt amount is added to salary income and taxed at the applicable slab rate.
Frequently Asked Questions
What is the formula for gratuity calculation?
Gratuity = (Last drawn salary × 15 × Years of service) ÷ 26. "Last drawn salary" means basic + dearness allowance. "Years of service" is rounded to the nearest full year (6+ months = 1 year). This formula applies to employees covered under the Payment of Gratuity Act, 1972.
Is gratuity taxable in India?
Gratuity received by a government employee is fully exempt from tax. For non-government employees covered under the Payment of Gratuity Act, 1972, the tax-exempt amount is the least of: actual gratuity received, ₹20,00,000 (maximum exemption limit), or (Last salary × 15 × Years of service) ÷ 26. The excess is taxable as salary income.
Who is eligible for gratuity?
An employee who has completed at least 5 years of continuous service with the same employer is eligible for gratuity. The 5-year rule is waived in cases of death or disability. Gratuity applies to all employees (factory, mine, oilfield, plantation, port, railway, shop or establishment with 10 or more employees).
What is the maximum gratuity exemption limit?
The maximum tax-exempt gratuity is ₹20,00,000 (₹20 lakh) as per the Income-tax Act, 2025. Any gratuity received above this limit is taxable as salary income in the Tax Year of receipt.
How many days are used in the gratuity formula — 26 or 30?
The Payment of Gratuity Act uses 26 working days per month (assuming 4 Sundays off per month). So the formula divides by 26, not 30. Some employers use 30-day formulas for non-statutory gratuity — always check your appointment letter or company policy.
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