About the Gratuity Formula Calculator
What is the Gratuity Formula Calculator?
The gratuity formula under the Payment of Gratuity Act pays 15 days' wages for every completed year of service, where a month is taken as 26 working days.
Service of more than six months in the final year counts as a full year. Employers not covered by the Act use half a month's pay per year instead.
How to use the Gratuity Formula Calculator
- Last Drawn Monthly Basic + DA (₹) (sample: 50,000)
- Completed Years of Service (sample: 10)
- Additional Months of Service (sample: 7)
- Employer Covered by the Payment of Gratuity Act? (sample: Yes (10 or more employees))
- Press Calculate Gratuity (results also refresh as you type). The result card shows the Gratuity Payable, along with Eligibility, Years counted, Formula used and Tax-exempt portion.
Formula used
Gratuity = Last drawn basic + DA × 15 ÷ 26 × Years of service
- Years of service = completed years, rounded up if the extra months exceed six
- Not covered by the Act = basic + DA × 15 ÷ 30 × completed years
Gratuity up to ₹20 lakh is tax-exempt for private-sector employees; government employees' gratuity is fully exempt.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Last Drawn Monthly Basic + DA (₹) | 50,000 |
| Completed Years of Service | 10 |
| Additional Months of Service | 7 |
| Employer Covered by the Payment of Gratuity Act? | Yes (10 or more employees) |
| Result | Value |
|---|---|
| Gratuity Payable | ₹3,17,308 |
| Eligibility | Eligible – 5 or more years of continuous service |
| Years counted | 11 |
| Formula used | Basic + DA × 15/26 × years |
| Tax-exempt portion | ₹3,17,308 |
| Taxable portion | ₹0 |
Tips for using the Gratuity Formula Calculator
- You need at least five years of continuous service, except in case of death or disability.
- Under the Code on Social Security, fixed-term employees qualify after one year.