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Gratuity Calculator India 2025
Calculate your gratuity amount using the Payment of Gratuity Act formula. Enter your last basic salary and years of service.
Eligible — 7 years qualifies
Gratuity Amount
₹2,01,923
You are eligible
Calculation
Gratuity by Years of Service
Gratuity Formula Explained
Formula: (Basic + DA) × 15 × Years ÷ 26. Example: Basic ₹50,000/month, 7 years service → ₹50,000 × 15 × 7 ÷ 26 = ₹2,01,923. The "15 days" represents half a month's salary per year. Capped at ₹20 lakh by law.
Gratuity Eligibility Rules
You must complete 5 continuous years with the same employer. Continuous service includes authorised leaves, medical leave, and maternity leave. If you complete 240 days in the 5th year, the 5th year counts as complete even if you leave mid-year.
Gratuity in Your CTC
Employers often show gratuity as 4.81% of basic in the CTC breakup. This is the annualised equivalent of the 15/26 formula. However, you only receive this if you complete 5 years. It is a contingent benefit, not guaranteed monthly income.
Gratuity vs PF
Gratuity is paid entirely by the employer — you do not contribute. PF is split 50/50 between employee and employer. Both are retirement-oriented benefits, but gratuity has a 5-year lock-in while PF can be partially withdrawn earlier under specific conditions.
A LITTLE MORE CLARITY
Frequently asked questions
What is the formula for gratuity in India?
Gratuity = (Last drawn Basic + DA × 15 × Years of service) ÷ 26. The "15" represents 15 days of wages, and "26" represents working days in a month (excluding Sundays). The statutory maximum is ₹20 lakh regardless of calculation.
After how many years am I eligible for gratuity?
You are eligible for gratuity after completing 5 years of continuous service with the same employer. If you leave before 5 years, you forfeit the gratuity. Note: if you work more than 240 days in the 5th year, it is counted as a full year.
Is gratuity taxable in India?
Gratuity up to ₹20 lakh received from a private sector employer is fully exempt from income tax under Section 10(10)(ii). Any amount above ₹20 lakh is taxable as salary income. Government employees get full exemption with no cap under Section 10(10)(i).
What happens to my gratuity if I am terminated?
If you are terminated after 5 years of service (other than for willful misconduct, negligence, or violent behaviour), you are entitled to full gratuity. If terminated for misconduct, the employer can forfeit gratuity under the Payment of Gratuity Act 1972.
Is gratuity included in my CTC?
Many Indian employers include a gratuity component in the CTC calculation (4.81% of basic salary = 15/26 × basic/12). However, this is a notional inclusion — you only receive this money if you complete 5 years of service and resign or are terminated.
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Static model assumptions can differ from the applicable tax year, statutory rules, and your payroll structure. Figures are estimates; consult a qualified professional before relying on them.