Gratuity Calculator India
As per Payment of Gratuity Act, 1972 · Covered & Non-Covered Companies
Free Gratuity Calculator India — Payment of Gratuity Act 1972
Enter your last drawn Basic salary and total years of service to instantly calculate your gratuity entitlement. Supports both Act-covered and non-covered companies. No login required.
Gratuity Calculator
Only Basic + DA — not full CTC or gross salary
10+ employees = Covered by Act (15/26 formula)
0 – 11 months (fractions below 6m are ignored)
✓ Employee is eligible for gratuity
Estimated Gratuity Amount Payable
₹86,538
₹30,000 × 15 ÷ 26 × 5
15/26 — Covered company
Service: 5y 0m → 5 year(s) used
Formula used: (Last Basic + DA) × 15 ÷ 26 × Years of Service · Months rule: ≥6 months rounds up, <6 months ignored · Tax-exempt limit: ₹20,00,000 (private sector)
Gratuity Formula — Covered vs Non-Covered Companies
| Covered Company | Non-Covered Company | |
|---|---|---|
| Applicability | 10 or more employees | Fewer than 10 employees |
| Formula | (Basic + DA) × 15 ÷ 26 × Years | (Basic + DA) × 15 ÷ 30 × Years |
| Divisor logic | 26 = working days per month | 30 = calendar days per month |
| Governed by | Payment of Gratuity Act 1972 | Contract / custom policy |
| Minimum service | 5 years continuous service | 5 years (conventional) |
| Max tax-exempt | ₹20,00,000 (private sector) | ₹20,00,000 (private sector) |
| Employer obligation | Mandatory — legal right | Voluntary / policy-based |
What Is Gratuity?
Gratuity is a statutory payment made by an employer to an employee as a token of appreciation for long and loyal service. It is governed by the Payment of Gratuity Act, 1972 in India and applies to all companies with 10 or more employees.
When Is Gratuity Paid?
- Retirement or superannuation
- Resignation after 5+ years of service
- Termination (excluding misconduct)
- Death — paid to nominee regardless of years
- Permanent disablement — no minimum service
Key Facts About Gratuity
- Calculated on Basic + DA only (not gross)
- Gratuity = 4.81% of Basic per year (approx.)
- Employer must pay within 30 days of due date
- Max tax-exempt: ₹20 lakhs (private sector)
- Entirely exempt for government employees
How Are Years of Service Counted?
Under the Payment of Gratuity Act 1972, fractional years are treated as follows: if the remaining months are 6 or more, they are rounded up to the next full year. If less than 6 months, the fraction is ignored. This applies to the last partial year only.
Service period
5 years 0 months
Years used for calculation
5 years
Service period
7 years 5 months
Years used for calculation
7 years (< 6m ignored)
Service period
7 years 6 months
Years used for calculation
8 years (≥ 6m → round up)
Important: This tool uses the standard Act formula. If months ≥ 6, years are rounded up automatically. Enter exact months for accurate calculation.
Gratuity as Part of CTC
Many Indian employers include gratuity as part of the CTC package. The annual gratuity provision is typically shown as 4.81% of Basic salary per year (derived from 15 ÷ 26 ÷ 12 = 0.0481). This means the employer sets aside this amount monthly but pays it only after the employee completes 5 years of service.
Annual Gratuity Provision
Basic × 4.81%
Amount employer sets aside each year in CTC
If You Leave < 5 Years
Not Paid
CTC component is forfeited — no gratuity payable
If You Complete 5+ Years
Full Gratuity Paid
Calculated on last Basic × 15/26 × total years
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Frequently Asked Questions — Gratuity in India
What is the formula to calculate gratuity in India?▼
Covered company (10+ employees): Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service. Non-covered company (<10 employees): Gratuity = (Basic + DA) × 15 ÷ 30 × Years of Service. Only Basic Salary and Dearness Allowance are used — not CTC or gross salary.
What is the minimum service required for gratuity?▼
Minimum 5 years of continuous service is required to be eligible for gratuity under the Payment of Gratuity Act 1972. Exception: In case of death or permanent disablement, gratuity is paid regardless of how many years the employee has served.
What is the maximum tax-exempt gratuity in India 2026?▼
The maximum tax-exempt gratuity for private sector employees in 2026 is ₹20,00,000 (₹20 lakhs). Gratuity received above this limit is taxable as income. For central and state government employees, the entire gratuity amount is fully tax-exempt.
What is the difference between covered and non-covered companies?▼
Covered companies (10+ employees) use the 15/26 formula — 26 represents working days in a month. Non-covered companies (<10 employees) use the 15/30 formula — 30 represents calendar days. Once a company reaches 10 employees and becomes 'covered', it remains covered permanently even if headcount drops.
Is gratuity calculated on basic salary or CTC?▼
Gratuity is calculated on Basic Salary + Dearness Allowance (DA) only — not on CTC or gross salary. Most private sector employees have zero DA, so gratuity is effectively calculated on Basic Salary alone. CTC components like HRA, allowances, and employer PF are excluded.
How are partial years counted for gratuity calculation?▼
If the remaining months are 6 or more, they are rounded up to the next full year. If less than 6 months, the fraction is ignored. For example: 7 years 7 months = 8 years for calculation. 7 years 4 months = 7 years. This rounding applies to the final partial year only.
When must the employer pay gratuity?▼
The employer must pay gratuity within 30 days of it becoming payable — on retirement, resignation, termination, death, or disablement. If the employer fails to pay within 30 days, they must pay interest on the outstanding amount at the rate specified by the Central Government.
Can an employer deny or forfeit gratuity?▼
An employer can forfeit gratuity wholly or partially only if the employee was terminated for: (1) Wilful misconduct causing damage to employer property, (2) Riotous or disorderly conduct, or (3) Offences involving moral turpitude. In all other cases, withholding gratuity is a criminal offence under the Act.
Is gratuity part of CTC in India?▼
Many employers include a gratuity provision in CTC at 4.81% of Basic Salary per year (= 15/26/12). This is set aside monthly but paid only after 5 years of service. If an employee leaves before 5 years, they do not receive this CTC component.
What happens to gratuity if an employee dies before 5 years?▼
In case of an employee's death, gratuity is paid to the nominee or legal heir regardless of service duration. No minimum service period applies. The calculation uses the same formula — (Basic + DA) × 15/26 × years served — for whatever period the employee had completed.
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