Gratuity Calculator

Gratuity = (Last drawn basic + DA) × 15 × years of service ÷ 26, capped at ₹20 lakh. It is generally payable after five years of continuous service. Enter the last-drawn monthly salary (basic + DA) and completed years of service.

Last-drawn Basic + DA (₹/month) Years of service

Gratuity payable—

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How gratuity is calculated

Formula: Gratuity = Last drawn (Basic + DA) × 15 × completed years ÷ 26. The "26" represents working days in a month; "15" is 15 days' wages for each year.
Cap: the maximum tax-free gratuity is ₹20 lakh under the Payment of Gratuity Act.
Eligibility: normally 5 years of continuous service (relaxed in cases of death or disablement; fixed-term employees may qualify earlier).

Fact box. Gratuity = (last drawn basic + DA) × 15 × years ÷ 26, subject to a ceiling of ₹20,00,000.

Worked example

Last-drawn basic + DA of ₹40,000 with 8 years of service: gratuity = 40,000 × 15 × 8 ÷ 26 = ₹1,84,615.

Frequently asked questions

What is the gratuity formula? (Last drawn basic + DA) × 15 × number of completed years ÷ 26, capped at ₹20 lakh.

Is 5 years of service compulsory for gratuity? Generally yes — five years of continuous service. Exceptions apply on death or disablement, and fixed-term employees can become eligible sooner under the new labour codes.

Is a part-year counted? A year is counted if you have worked more than six months in it; six months or less is ignored for the year count.

Sources

Payment of Gratuity Act, 1972 — labour.gov.in.

General information, not professional advice. Confirm your eligibility and figures with a qualified professional. See our Disclaimer.