Gratuity Calculator 2026 - Calculate Gratuity Amount India

Calculate your gratuity amount with our free gratuity calculator based on Indian labour laws. Gratuity is a statutory benefit payable to employees who have completed minimum 5 years of continuous service. This calculator uses the official formula prescribed under the Payment of Gratuity Act, 1972: (Last Drawn Salary × Years of Service × 15) / 26. The calculation includes basic salary and dearness allowance. Maximum gratuity payable is capped at ₹20 lakhs as per current law. Perfect for employees planning retirement, resignation, or switching jobs to understand their gratuity entitlement. Also useful for HR departments to calculate employee gratuity liabilities. The calculator considers complete years of service and the mandatory 5-year minimum service requirement for gratuity eligibility.

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Calculate Your Gratuity

₹
years

Important Notes:

  • •Minimum 5 years of service required for gratuity
  • •Salary = Basic + Dearness Allowance only
  • •Maximum gratuity capped at ₹20 lakhs
  • •Tax-free up to ₹20 lakhs for private employees

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Gratuity Calculation Formula and Method

Official Gratuity Formula

Gratuity = (Last Drawn Salary × Years of Service × 15) / 26

Where:

•Last Drawn Salary = Basic Salary + Dearness Allowance

•Years of Service = Complete years worked (minimum 5 years)

•15 = Days of wages for each completed year

•26 = Number of working days in a month

•Maximum Amount = ₹20,00,000 (Twenty Lakhs)

Example Calculations

Example 1: Standard Calculation

Last Drawn Salary: ₹50,000.00 (Basic + DA)
Years of Service: 10 years
Gratuity = (50,000 × 10 × 15) / 26
Gratuity = 75,00,000 / 26
Gratuity = ₹2,88,461.54

Example 2: Maximum Cap Applied

Last Drawn Salary: ₹1,50,000.00
Years of Service: 30 years
Gratuity = (1,50,000 × 30 × 15) / 26
Gratuity = 6,75,00,000 / 26
Gratuity = ₹25,96,153.85 (Calculated)
Actual Gratuity = ₹20,00,000.00 (Maximum cap applies)

Gratuity Amount Based on Salary and Service

Last Salary5 Years10 Years15 Years20 Years25 Years
₹25,000₹72,115.38₹1,44,230.77₹2,16,346.15₹2,88,461.54₹3,60,576.92
₹40,000₹1,15,384.62₹2,30,769.23₹3,46,153.85₹4,61,538.46₹5,76,923.08
₹60,000₹1,73,076.92₹3,46,153.85₹5,19,230.77₹6,92,307.69₹8,65,384.62
₹80,000₹2,30,769.23₹4,61,538.46₹6,92,307.69₹9,23,076.92₹11,53,846.15
₹1,00,000₹2,88,461.54₹5,76,923.08₹8,65,384.62₹11,53,846.15₹14,42,307.69
₹1,50,000₹4,32,692.31₹8,65,384.62₹12,98,076.92₹17,30,769.23₹20,00,000.00*

*Maximum gratuity capped at ₹20 lakhs

Gratuity Eligibility and Rules

Who is Eligible?

  • Employees who completed 5+ years of continuous service
  • Applies to companies with 10 or more employees
  • Covers factories, mines, oilfields, plantations, ports, railways
  • Shops and establishments under state gratuity acts
  • Payable on retirement, resignation, death, or disability
  • In case of death/disability, 5-year rule waived

Who is NOT Eligible?

  • Employees with less than 5 years of service (except death/disability)
  • Terminated for misconduct involving moral turpitude
  • Terminated for riotous/violent behavior
  • Terminated for willful damage to company property
  • Companies with less than 10 employees (unless voluntary)
  • Apprentices and trainees (in some cases)

Tax Treatment of Gratuity

Employee TypeTax-Free LimitTax on Excess
Government EmployeesFully tax-free (no limit)N/A
Private Sector (Gratuity Act covered)Up to ₹20 lakhsTaxed as salary at slab rates
Private Sector (Not covered by Act)Least of: Actual, ₹20L, or (Salary×Years×15)/26Excess taxed as salary

Gratuity Payment Process

Step 1: Employee submits resignation or retires
Step 2: Employee fills Form I (Application for Gratuity)
Step 3: Employer verifies service period and salary details
Step 4: Gratuity calculated as per formula
Step 5: Payment must be made within 30 days from due date
Step 6: If delayed, employer pays interest on delayed amount
Step 7: Employee receives payment via cheque or bank transfer

Important Points to Remember

  1. Continuous Service: 5 years must be continuous. Breaks in service may reset the counter unless on authorized leave.
  2. Salary Components: Only Basic + DA is considered. HRA, allowances, bonuses are excluded.
  3. Maximum Amount: Legally capped at ₹20 lakhs. Even if calculated more, you get only ₹20L maximum.
  4. Incomplete Years: Years and months both count. For 5 years 7 months, round to 6 years for calculation.
  5. Forfeiture: Gratuity can be forfeited wholly or partially for misconduct causing financial loss.
  6. Nomination: Always nominate family members to receive gratuity in case of death.
  7. State Laws: Some states have different gratuity rules for shops and establishments.
  8. Claims: In case of non-payment, can file complaint with controlling authority within prescribed time.

Frequently Asked Questions

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