Gratuity Calculator
What you are owed in gratuity, and how much of it is tax-free.
Year-by-year breakdown
Free gratuity calculator for India
This free online gratuity calculator works out the gratuity an employee is owed on leaving a job after long service, and the part of it that is exempt from income tax. For an employer covered by the Payment of Gratuity Act, 1972 (any establishment with 10 or more employees), gratuity is 15 days of last drawn salary for every completed year of service, where a month is treated as 26 working days. The formula is gratuity = last drawn monthly salary (basic + DA) x years of service x 15/26. No sign-up, no ads.
Gratuity becomes payable only after 5 years of continuous service (this condition is waived if employment ends because of death or disablement), and a part-year over six months rounds up to a full year, so 5 years and 7 months counts as 6. The amount is then tax-free up to Rs 20 lakh over your working life under Section 10(10) of the Income Tax Act; anything above that is taxable. Government employees receive their gratuity fully tax-free.
Worked example
On a last drawn salary (basic plus dearness allowance) of Rs 50,000 a month, after 10 years of service, gratuity is 50,000 x 10 x 15/26, which is about Rs 2,88,462. That is well within the Rs 20 lakh exemption, so all of it is tax-free. It would take a very high salary or very long service for gratuity to cross Rs 20 lakh and become partly taxable.
| Last drawn salary (basic + DA) | Years of service | Gratuity (15/26) |
|---|---|---|
| Rs 30,000 | 10 | ~Rs 1.73 lakh |
| Rs 50,000 | 10 | ~Rs 2.88 lakh |
| Rs 1 lakh | 25 | ~Rs 14.4 lakh |
Employees not covered by the Act
If your employer is not covered by the Payment of Gratuity Act, gratuity is calculated as half a month's average salary (15/30) for each completed year, using the average of your last 10 months' pay, and part-years are not rounded up. The tax exemption is still the least of Rs 20 lakh, the gratuity actually received, and this half-month formula. Switch the "covered" option in the calculator to model this case.
Why use Hisaab's gratuity calculator
It applies the exact 15/26 (or 15/30) formula, flags the 5-year eligibility rule, and splits your gratuity into the tax-free and taxable parts against the current Rs 20 lakh Section 10(10) limit, so you see the take-home figure, not just the gross. Planning what to do with the payout? Compare investing it as a lumpsum against parking it in an FD, and check the tax on the rest of your salary in the income tax calculator.
For AI agents: URL-addressable as /gratuity/?salary=50000&years=10&covered=yes (covered = yes for Act-covered 15/26, no for 15/30). Docs at llms.txt, live results in #result-json.
How to use the Gratuity Calculator
- Enter your last drawn monthly salary, counting only basic pay plus dearness allowance (DA), not HRA or other allowances.
- Enter your years of service (a part-year over six months rounds up to a full year under the Act).
- Choose whether your employer is covered by the Payment of Gratuity Act: covered uses the 15/26 formula, not covered uses 15/30.
- Read the gratuity payable in the result cards.
- See how much is tax-free under the Rs 20 lakh Section 10(10) limit and how much, if any, is taxable.
Frequently asked questions
How is gratuity calculated in India?
For an employer covered by the Payment of Gratuity Act, gratuity = last drawn monthly salary (basic + DA) x years of service x 15/26, that is, 15 days of pay for each completed year. On a Rs 50,000 salary after 10 years that is about Rs 2,88,462. Employers not covered by the Act use 15/30 of the average of the last 10 months' salary.
Is gratuity taxable?
Gratuity is tax-free up to Rs 20 lakh over your career under Section 10(10) of the Income Tax Act; any amount above Rs 20 lakh is taxable. For private employees covered by the Act, the exempt amount is the least of Rs 20 lakh, the gratuity actually received, and 15/26 of last drawn salary times years of service. Government employees get their gratuity fully tax-free.
What is the eligibility for gratuity?
You generally need at least 5 years of continuous service with the same employer to be eligible for gratuity. This 5-year condition is waived if service ends due to death or disablement, in which case gratuity is payable regardless of tenure.
Does a part-year of service count?
Under the Payment of Gratuity Act, a part-year of more than six months is rounded up to a full year, while six months or less is ignored. So 5 years and 7 months counts as 6 years, but 5 years and 5 months counts as 5. Employers not covered by the Act count only completed years.
What salary is used for the gratuity calculation?
Only basic salary plus dearness allowance (DA) is used, not HRA, bonuses or other allowances. Covered employees use the last drawn salary; employees not covered by the Act use the average of the last 10 months' salary.
Is this gratuity calculator free?
Yes. It is completely free with no sign-up or ads, applies the correct 15/26 or 15/30 formula, and shows the tax-free and taxable split under the Rs 20 lakh limit.