Gratuity is a lump-sum thank-you your employer legally owes you after five years of continuous service — not a favour, a statutory right under the Payment of Gratuity Act, 1972. It is calculated from your last drawn salary (basic + dearness allowance) and your completed years of service, and it is payable on resignation, retirement, retrenchment or death. Many employees discover at exit that they never knew the amount; this calculator applies the exact statutory formula so you can verify your employer's figure, plan around a job switch, or estimate the payout waiting at retirement.
The gratuity formula
The 15/26 factor represents 15 days' wages for each completed year, on a 26-working-day month. Six months or more in the final year counts as a full year.
Example
Last drawn basic + DA: ₹60,000/month, 8 years 7 months of service (counts as 9 years). Gratuity = 15 × 60,000 × 9 ÷ 26 ≈ ₹3,11,538.
Eligibility and tax
You qualify after 5 continuous years (except on death/disablement, where it is payable immediately). Government employees use a slightly different formula (¼ month's pay per half-year). Gratuity is tax-exempt up to ₹25 lakh for non-government employees under Section 10(10).
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Frequently asked questions
Am I eligible for gratuity?
If you completed 5 continuous years with an employer covered by the Act (establishments with 10+ employees), yes — on resignation, retirement or retrenchment. On death or disablement, it is payable regardless of tenure.
Is gratuity taxable?
Up to ₹25 lakh is exempt for non-government employees under Section 10(10). Government employees get full exemption.
What salary counts for gratuity?
Basic salary plus dearness allowance as last drawn. Allowances like HRA are excluded.
When must the employer pay gratuity?
Within 30 days of it becoming payable. Delayed payment attracts interest.