Gratuity Calculator — Formula & ₹20L Tax Exemption (2026)
Calculate your gratuity with the statutory (15/26) formula under the Payment of Gratuity Act. Tax-free up to ₹20 lakh for private-sector employees; eligibility from 5 years of service (4 years 240 days per court rulings).
How gratuity is calculated
For employees covered by the Payment of Gratuity Act, 15 days' wages (out of a 26-working-day month) are paid for every completed year of service, based on the last drawn basic + DA. Six months or more in the final year rounds up to a full year.
(15 ÷ 26) × 50,000 × 10 = ₹2,88,462
Example gratuity amounts
| Last drawn basic + DA | Years of service | Gratuity |
|---|---|---|
| ₹30,000 | 7 | ₹1,21,154 |
| ₹50,000 | 10 | ₹2,88,462 |
| ₹75,000 | 15 | ₹6,49,038 |
| ₹1,00,000 | 20 | ₹11,53,846 |
Gratuity rules at a glance (July 2026)
| Feature | Detail |
|---|---|
| Formula | (15/26) × last drawn basic+DA × completed years (≥6 months rounds up) |
| Eligibility | 5 years' continuous service (4 years 240 days per court rulings); waived on death/disablement |
| Tax exemption | Up to ₹20 lakh lifetime for private sector; fully exempt for government employees |
| Salary base | Basic + DA only — excludes HRA and other allowances |
| Payment deadline | Employer must pay within 30 days of it becoming due |
Frequently asked questions
How is gratuity calculated in India?
Gratuity = (15/26) × last drawn monthly salary (basic + DA) × completed years of service. Service of 6 months or more in the final year rounds up to a full year. For ₹50,000 basic+DA and 10 years, gratuity is ₹2,88,462.
How much gratuity is tax-free?
For private-sector employees covered by the Payment of Gratuity Act, gratuity is tax-free up to ₹20 lakh (lifetime aggregate). Any amount above that is taxed as salary. Government employees' gratuity is fully exempt.
Am I eligible for gratuity after 4 years and 240 days?
The Act requires 5 years of continuous service, but several court rulings have held that 4 years and 240 days counts as 5 years for eligibility. The 5-year condition is waived entirely in case of death or disablement.
Is gratuity paid on basic salary or gross salary?
Gratuity is calculated only on last drawn basic salary plus dearness allowance (DA) — not on gross salary, HRA or other allowances.
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