Gratuity calculator
How much gratuity do I get when I leave, and does the ₹20 lakh cap bite?
Monthly Basic on your final payslip — not gross, and not CTC.
Only if your salary has a DA line. Most private salaries do not.
The Act rounds the year up only once the trailing months reach six. Five months counts for nothing; six adds a whole year.
Ten or more employees means covered — and covered divides by 26 working days instead of 30 calendar ones, which is worth about 15% more.
₹2,88,462after 10 years of service
- Counted service
- 10 years
- Last drawn Basic + DA
- ₹50,000
- If you were not covered
- ₹2,50,000
- Lost to the ₹20 L cap
- ₹0
(Basic + DA) × 15 × years ÷ 26. Payment of Gratuity Act, 1972 · ₹20 L ceiling from 2018. Tax-free up to ₹20,00,000 for a private employee — and that ceiling is a lifetime total across employers, so an earlier gratuity eats into it and nothing here knows about that one.
- Covered by the Act (÷26)
- Not covered (÷30)
| Years served | Covered (÷26) | Not covered (÷30) |
|---|---|---|
| 5 | ₹1,44,231 | ₹1,25,000 |
| 6 | ₹1,73,077 | ₹1,50,000 |
| 7 | ₹2,01,923 | ₹1,75,000 |
| 8 | ₹2,30,769 | ₹2,00,000 |
| 9 | ₹2,59,615 | ₹2,25,000 |
| 10 | ₹2,88,462 | ₹2,50,000 |
| 11 | ₹3,17,308 | ₹2,75,000 |
| 12 | ₹3,46,154 | ₹3,00,000 |
| 13 | ₹3,75,000 | ₹3,25,000 |
| 14 | ₹4,03,846 | ₹3,50,000 |
| 15 | ₹4,32,692 | ₹3,75,000 |
Gratuity is the lump sum an employer owes you for having stayed — fifteen days of your last drawn Basic (plus DA, if your salary has a DA line) for every completed year, paid when you resign, retire or are let go after five years. Two things decide whether the number in your head is right: how the Act rounds your final part-year, and whether your employer is one it covers, because a covered employer divides your monthly wage by 26 working days and everyone else by 30 calendar ones. Put in your last Basic and your service and this says what is due, what the other basis would have paid, and how far you are from the ₹20 lakh ceiling.
A worked example
Someone leaving a 900-person software company in Bengaluru. Last payslip Basic ₹52,000, no DA line, joined twelve years and eight months ago, employer covered by the Act. Set the fields above to Basic ₹52,000, DA ₹0, 12 full years, 6 months or more, covered — and the page returns:
- ₹3,90,000, on 13 counted years
- ₹3,38,000 if the same employer had not been covered
- ₹0 lost to the ₹20 lakh ceiling
Two of those years are worth noticing. The service is twelve years and eight months, but the trailing eight months are over six, so section 4(2) rounds the whole year up and you are paid for thirteen. Had the person left three months earlier — twelve years and five months — the counted service would have been twelve years and the payout ₹3,60,000. Ninety days of work, ₹30,000.
Fifteen days of Basic per year is ₹30,000 a year here, and it arrives in whole steps — nothing accrues between the six-month lines.
Covered, or not covered
An establishment with ten or more employees on any day in the preceding twelve months is covered by the Act, and once covered it stays covered even if the headcount later falls (section 1, sub-sections 3 and 3A). The practical difference is the divisor: a covered employer treats a month as 26 working days, so fifteen days’ wages is 15/26 of the monthly figure. An uncovered one works on 30.
| Covered by the Act | Not covered | |
|---|---|---|
| Who | 10 or more employees | Under 10, and never crossed it |
| Basis | 15 days ÷ 26 working days | 15 days ÷ 30 calendar days |
| On Basic ₹52,000, 13 years | ₹3,90,000 | ₹3,38,000 |
| Is it a legal right | Yes — statutory | No — contractual or ex gratia |
| Part-year over 6 months | Rounds up, by statute | Whatever the policy says |
The same service and the same Basic, ₹52,000 apart. Ask HR which basis your establishment is on before you plan around either number.
The uncovered column is the softer one in every row. If your employer is not covered, gratuity is a company policy rather than an entitlement — many pay on the same 15/26 basis anyway, and the income-tax exemption for an uncovered employee is computed differently again, on half a month’s average salary over your last ten months for each completed year, with fractions of a year ignored. Read the ÷30 figure here as the shape of it, not as the number your policy owes.
Where the ₹20 lakh ceiling bites
Section 4(3) caps the gratuity payable, and the cap has stood at ₹20 lakh since the 2018 amendment and the notification that followed it. At ₹52,000 Basic it is irrelevant. At a ₹2,00,000 Basic it arrives in the middle of a career: seventeen completed years works out at ₹19,61,538, and the eighteenth is where the ceiling bites — it adds ₹38,462 instead of the ₹1,15,385 a year is worth here, and every year after it adds nothing. Enter Basic ₹2,00,000, DA ₹0, 30 years, covered, and the page shows ₹20,00,000 paid with ₹14,61,538 lost to the ceiling — twelve years of service that earn nothing more.
What this number does not include
The ceiling is a lifetime one, and this page cannot see your last job
The ₹20 lakh tax exemption is an aggregate across every employer over your working life. Gratuity already received tax-free from an earlier job reduces what is exempt now, and the calculator only knows about the service you typed in.
Anything above the exempt amount is salary, and TDS applies
The excess is taxed at your slab rate as part of salary income and your employer deducts tax on it before paying out. The headline above is the gross entitlement, not what reaches your bank account.
Notice, leave encashment and PF are separate settlements
A full-and-final statement bundles gratuity with leave encashment, the notice-period adjustment and your PF and pension withdrawal, each with its own rule and its own tax treatment. None of them are in this figure.
Breaks and non-continuous service can cut your counted years
Section 2A defines continuous service, and unpaid absence beyond what it allows, or a resignation and rehire, can reset the clock. Deputation, a transfer within a group with continuity preserved in writing, and statutory leave normally do not.
A fixed-term or contract role may follow a different rule
The Code on Social Security, 2020, which subsumes the 1972 Act, provides pro-rata gratuity for fixed-term employees without the five-year wait. If you are on a fixed-term contract, confirm which instrument your establishment is operating under before assuming the five-year bar applies to you.
Salary revisions and notice periods change the last drawn figure
Everything scales off the Basic on your final payslip, so an increment or a demotion in your last month moves the whole payout. If you are serving notice, the Basic to use is the one you will actually be drawing on your last working day.
Where to go next
Gratuity is one of three things a resignation releases. The EPF calculator shows the corpus sitting in the provident fund account this employer has been paying into, which is usually the larger number of the two, and the salary calculator works backwards from CTC to the Basic that every gratuity figure on this page depends on. If you are leaving for good rather than for a new job, run the retirement calculator — a gratuity payout is the one lump sum most people receive before retiring, and where it lands matters more than what it was.
How many years do I need to be eligible for gratuity?
Five years of continuous service with the same employer, under section 4(1) of the Payment of Gratuity Act, 1972. The five-year condition is waived if service ends because of death or disablement, in which case gratuity is payable for whatever service there was. Note that the five years are per employer, not a career total — changing jobs at four years and ten months twice leaves you with nothing, which is why the calculator above prints ₹0 with a reason rather than a figure when the counted service comes to less than five.
Does 4 years and 7 months count as 5 years for gratuity?
No. The rounding rule in section 4(2) applies to a part-year "in excess of six months" only after the fifth completed year — so 5 years 7 months is treated as 6, but 4 years 7 months is still under the eligibility bar and nothing is payable. Several High Courts have separately read 4 years and 240 days of continuous service in a covered establishment as satisfying the fifth year; that is a litigated position, not something an employer will pay on request, so do not plan around it.
Is gratuity calculated on Basic or on gross salary?
On "wages" as the Act defines them in section 2(s) — basic pay plus dearness allowance, and commission fixed as a percentage of turnover if that is how you are paid. HRA, conveyance, bonus, overtime, employer PF contribution and every other allowance are excluded. That is why the field above asks for the Basic line on your final payslip and not your gross or your CTC: putting gross in inflates the answer by whatever your allowances happen to be.
Is gratuity taxable, and is it different under the new regime?
Gratuity received from a private employer covered by the Act is exempt under section 10(10)(ii) up to the lower of the amount received, the formula amount, and the ₹20 lakh notified ceiling; the exemption is the same under the old and the new regime, so this is not a regime choice. The ceiling is a lifetime aggregate across every employer you ever receive gratuity from — if an earlier job already paid you ₹8 lakh tax-free, only ₹12 lakh of the next one is exempt. Gratuity from central or state government service is fully exempt.
How long does an employer have to pay my gratuity?
Thirty days from the day it becomes payable, under section 7(3) of the Act, and the employer owes simple interest on a delayed payment under section 7(3A). You are meant to file Form I with the employer; the employer is obliged to work out the amount and issue a notice whether or not you ask. If it does not come, the route is an application to the Controlling Authority under section 7(4) — the labour department of the state where you worked.
Can an employer refuse to pay gratuity?
Only on the narrow grounds in section 4(6): gratuity can be forfeited to the extent of damage caused by your wilful negligence, and wholly or partly if your services were terminated for riotous or disorderly conduct, an act of violence, or an offence involving moral turpitude committed in the course of employment. Resigning, being made redundant, or leaving on bad terms are not grounds. A "no gratuity in the offer letter" clause does not override the Act either — a statutory entitlement cannot be contracted away.
This page starts from typical figures. In Hundo the same calculator opens on your own — the loan, the deposit, the salary already on the ledger — and says where each number came from.