How to use the Gratuity Calculator
- Enter your last drawn basic salary plus DA.
- Enter your years and extra months of service.
- Pick your employment type to check eligibility.
- See your gratuity amount and taxable part.
Gratuity formula
Gratuity = 15 × last drawn (basic + DA) × years of service ÷ 26.
15 stands for 15 days' wages per year of service, and 26 is the number of working days in a month. If you served 6 months or more in your final year, it counts as a full year.
Example: with ₹40,000 basic + DA and 6 years 7 months of service (counted as 7 years), gratuity = 15 × 40,000 × 7 ÷ 26 = ₹1,61,538.
Eligibility under the new labour codes
Permanent employees become eligible after 5 years of continuous service. Under the Code on Social Security, in force from 21 November 2025, fixed-term employees become eligible after 1 year, on a pro-rata basis. In case of death or disablement, the 5-year condition does not apply.
Tax on gratuity
For private sector employees, gratuity is tax-free up to ₹20 lakh in a lifetime. Any amount above that is taxed as salary.
Frequently asked questions
Is gratuity paid before 5 years?
Permanent employees generally need 5 years. Fixed-term employees are eligible after 1 year under the new labour codes. It is also paid regardless of service in case of death or disability.
Is gratuity calculated on CTC?
No. It is calculated on your last drawn basic salary plus dearness allowance.
How much gratuity is tax-free?
Up to ₹20 lakh for private sector employees covered by the gratuity law.
These tools give estimates for general guidance and are not financial or tax advice. Rates and rules can change; check official sources before making decisions.