Gratuity Calculator: Formula, Who Can Get It, and Tax Rules
Gratuity amounts to 15 days' pay for every year you work, with a day's pay being your monthly salary ÷ 26. On last wages of ₹30,000 a month (basic + DA), 10 years of service gives ₹1,73,077.
Gratuity due
—
| Wages a month | |
|---|---|
| For each year (15 ÷ 26 × wages) | |
| Years counted | |
| Gratuity | |
| Tax-free (up to ₹20 lakh) | |
| Taxable as salary |
For employees covered by the gratuity law. Your employer may pay more under its own scheme, but not less.
Gratuity by salary and years on the job
Last monthly salary (basic pay + DA) × 15 ÷ 26 × years.
| Years of service | Wages ₹30,000 a month | Wages ₹50,000 a month |
|---|---|---|
| 5 years | ₹86,538 | ₹1,44,231 |
| 7 years | ₹1,21,154 | ₹2,01,923 |
| 10 years | ₹1,73,077 | ₹2,88,462 |
| 15 years | ₹2,59,615 | ₹4,32,692 |
| 20 years | ₹3,46,154 | ₹5,76,923 |
How it's calculated
- Wages = your last monthly basic pay plus dearness allowance. If you provide total pay, wages must be at least 50% of that.
- Years counted = full years worked, plus an extra year if over six months remain. Your start date and final working day both count.
- Gratuity = 15 ÷ 26 × wages × years counted.
- You are eligible after 5 complete years of ongoing service, or 1 year on a fixed-term contract. No minimum if employment ends due to death or disablement.
- Up to ₹20 lakh of gratuity during your career is tax-free for private-sector workers; the rest gets taxed as salary.
Rules: the Code on Social Security, 2020, one of the laws effective from 21 November 2025. It retains the 15/26 formula from the Payment of Gratuity Act, 1972, and introduces the one-year rule for fixed-term staff and the 50% wage rule.
When to Use the Gratuity Calculator
Use the Gratuity Calculator when you're weighing a job change. It's handy once you have a job offer and are thinking about leaving your current position. You can see what gratuity amount you've earned and might miss if you switch jobs too soon.
The tool fits in once you've applied to roles on IT & Tech Jobs and have offers on the table. It's practical for understanding part of what you'll leave behind. Run the calculator after you receive an offer but before you hand in your notice. That way, you have all the details for your next steps.