Gratuity calculator
Estimate gratuity payable from last drawn basic + DA and years of service.
Gratuity payable
₹2,42,308
Standard formula for covered establishments, now under the Code on Social Security, 2020. The maximum is ₹20,00,000. Indicative only.
How it works
Gratuity is a lump sum paid to an employee who leaves after at least five years of continuous service (the condition does not apply on death or disablement). It was governed by the Payment of Gratuity Act, 1972 and is now part of the Code on Social Security, 2020, in force from 21 November 2025. The Code also extends gratuity to fixed-term employees after one year of service.
The calculator applies the standard formula for covered establishments and caps the result at the statutory ceiling of ₹20 lakh.
Formula
- Gratuity = 15 × last drawn wages × completed years of service ÷ 26
- Wages = basic + dearness allowance (DA)
- A part year of more than six months counts as a full year
- Maximum payable: ₹20,00,000
Worked example
Basic + DA of ₹50,000, service of 10 years 7 months
- Service rounded up to 11 years (7 months is more than six months)
- 15 × ₹50,000 × 11 ÷ 26 = ₹3,17,308
- Below the ₹20 lakh ceiling, so ₹3,17,308 is payable
Common mistakes to avoid
- Using gross or CTC instead of basic + DA as the wage.
- Dividing by 30 instead of 26 for an establishment covered by the statute.
- Forgetting to round a part year of more than six months up to a full year.
- Ignoring the one-year rule for fixed-term employees under the Code on Social Security.
Gratuity calculator: FAQs
Who is eligible for gratuity?
An employee who completes at least five years of continuous service with the employer, and a fixed-term employee after one year under the Code on Social Security, 2020. On death or disablement the service condition does not apply.
Why is the divisor 26?
The statute treats a month as 26 working days, so 15 ÷ 26 of monthly wages represents 15 days of wages for each year of service.
Is gratuity taxable?
For most private-sector employees, gratuity received up to ₹20 lakh over a lifetime is exempt from income tax. Amounts above that are taxable as salary. Confirm current limits with the Income Tax Department.
When must gratuity be paid?
Gratuity must be paid within 30 days of becoming payable. Delayed payment attracts simple interest.
Related reading
- What is gratuity? →
- Gratuity in India: eligibility, formula and tax →
- Full and final settlement in NeevHR →
- Payroll software for Indian companies →
NeevHR runs these calculations for your whole payroll
PF, ESI, PT, TDS, gratuity and bonus computed from one employee record every cycle.
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