Free tool · no sign-up
Gratuity calculator
Leaving after five years or more? See how much gratuity your employer owes you, and how much of it is tax-free.
Your gratuity
₹2,01,923
7 years counted
- Formula
- ₹50,000 × 15 ÷ 26 × 7
- Tax-free
- ₹2,01,923
- Taxable
- ₹0
- Gratuity payable
- ₹2,01,923
Private-sector employees. Government employees’ gratuity is fully tax-free.
Moving on after years in one company? Get your resume ready for what’s next.
Check my resume — freeHow gratuity is calculated
Gratuity = last monthly basic + DA × 15 ÷ 26 × years of service. That is 15 days’ wages for every year you worked, taking a month as 26 working days. With ₹50,000 basic + DA and 7 years, it’s ₹50,000 × 15 ÷ 26 × 7 = ₹2,01,923.
If the last year is more than six months, it counts as a full year: 6 years and 8 months is counted as 7. Six months exactly is not rounded up.
Who gets gratuity
Permanent employees qualify after five years of continuous service with the same employer. Under the labour codes in force since 21 November 2025, fixed-term employees qualify after one year. On death or disablement there is no minimum: gratuity is paid to you or your nominee.
The law covers employers with 10 or more employees. If yours is smaller and pays gratuity anyway, the usual formula is half a month’s pay (÷ 30) per completed year, and part-years don’t count.
Is gratuity taxable?
For private-sector employees, gratuity is tax-free up to ₹20 lakh over your career. Anything above that is taxed as salary. Government employees’ gratuity is fully tax-free. Your employer must pay within 30 days of it falling due.
The labour codes also say wages (basic + DA) must be at least half your pay, which raises gratuity for anyone whose basic was set low. Ask HR which wage they use if your number looks off.