Gratuity calculator
Gratuity is a lump sum your employer owes you for staying. The law sets both the formula and the qualifying period, so it is one of the few leaving-a-job numbers that is not negotiable.
The rule is fifteen days of pay for every completed year, worked out on a twenty-six day month. Below five years of service you get nothing, which is why the fifth anniversary is worth planning around.
Gratuity owed
₹2,42,308
₹2,42,308 of it is tax free
- Years counted
- 7
- Daily rate
- ₹2,308
- Days of pay owed
- 105
- Gratuity payable
- ₹2,42,308
- Tax free portion
- ₹2,42,308
- Taxable portion
- ₹0
A part year over six months is rounded up to a whole year
Monthly pay divided by 26, not by 30
15 days for each completed year
Lifetime exemption cap of ₹20,00,000
Everything above is worked out in your browser. Nothing you type is sent to us or saved anywhere.
How this is worked out
- The formula is last drawn basic plus dearness allowance, times fifteen, times completed years, divided by twenty-six.
- The twenty-six is deliberate. The Act treats a month as twenty-six working days, which makes the daily rate higher than a simple divide by thirty.
- Service of four years and seven months or more counts as five years in most readings, because a part year beyond six months rounds up.
- The tax exemption is a lifetime cap of ₹20 lakh across every employer you ever have, not a per-job allowance.
What this does not cover
- Death or disability removes the five-year requirement entirely.
- Employers not covered by the Act may use a fifteen over thirty formula instead, which pays less. Check your appointment letter.
- Government employees have their gratuity fully exempt from tax, without the ₹20 lakh cap.
- The lifetime cap counts gratuity you have already received from earlier jobs.
Questions people ask
- Do I get gratuity if I resign rather than being let go?
- Yes. Resignation, retirement and termination all qualify, as long as you completed five years. The only thing that forfeits it is dismissal for certain kinds of misconduct.
- Does four years and eight months count as five years?
- In most cases yes, because a part year over six months rounds up. Some employers dispute it and the point has been litigated more than once, so get your service dates in writing before you argue it.
- How long does my employer have to pay it?
- Thirty days from the date it becomes payable. Beyond that, simple interest is due on the amount. It is one of the stronger protections in the Act, and most people never invoke it.
Where these figures come from
Rates and rules on this page were last checked against the source on . Tax law changes; check the source before you rely on a number for a decision.
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