PAYMENT OF GRATUITY ACT, 1972•SEC. 4•REPUBLIC OF INDIA
Gratuity, estimated.
A plain calculator for what you're owed under Section 4 of the Payment of Gratuity Act. Enter your Basic + DA and length of service. The formula, the eligibility, and the tax treatment are all shown alongside the number.
Your particulars
₹
Your last drawn Basic + DA — the most recent month, not what you earned when you joined. HRA, special allowance and bonus are excluded by law.
Where do I find this on my payslip?
Look at the earnings side of your latest payslip. Add up only these two lines:
Example payslip earnings showing which lines count towards gratuity
Basic Salary
30,000
use
Dearness Allowance (DA)
5,000
use
House Rent Allowance (HRA)
12,000
skip
Conveyance Allowance
1,600
skip
Special / Other Allowance
8,000
skip
Performance Bonus, LTA, OT
5,000
skip
Gross Salary
61,600
skip
Enter 35,000 — Basic 30,000 + DA 5,000. Not the gross, and not your take-home.
No DA line? That is normal. DA is standard for central and state government staff, PSUs, banks and many unionised factory jobs, where it is revised against the consumer price index — twice a year for central government employees. Most private-sector payslips have no DA at all, and then your Basic alone is the figure. It may also appear as VDA (Variable Dearness Allowance) on factory and contract-labour slips.
Which month? The last month you were paid. If you are still working, use this month’s payslip; the figure updates with every future increment.
Deductions do not matter. PF, professional tax and TDS come off the other side of the slip and have no effect on gratuity.
The Act covers establishments with ten or more employees — almost every firm.
Awaiting particulars.
Fill in the fields on the left; the estimate appears here as you type.
Eligible
Estimated payoutSec. 4(2)
₹0
Daily wage (Basic ÷ divisor)—
Days credited (15 per year)—
Completed years applied—
Nothing you type leaves the browser. No storage, no tracking, no analytics on inputs.
The formula
How the number is worked out
For employers covered under the Act: (Basic + DA) × 15 × completed years ÷ 26. Uncovered employers use a divisor of 30.
Completed years only. A final partial year over six months rounds up; six months or less is dropped.
The amount is computed on your last drawn Basic + DA — applied across the entire tenure, not the salary of each year.
The exemption under Section 10(10) is the least of ₹20 lakh, the gratuity actually received, and the amount computed under the Act's formula. Anything above that is taxable at your slab rate.
That ₹20 lakh is a lifetime limit across every employer, not a fresh allowance at each job. If you have already claimed gratuity exemption before, it eats into the headroom shown here.
Gratuity received by government employees is fully exempt from income tax, without the ₹20 lakh ceiling.
The five-year minimum is waived on death or permanent disability. Some employers honour the four-years-and-240-days rule as the fifth year.
Who the Act covers: private employees and beyond
The Payment of Gratuity Act, 1972 applies to every factory, mine, oilfield, plantation, port and railway company, and to every shop or establishment that had ten or more employees on any day in the preceding twelve months. In practice that is almost every organised employer in India. Sec. 1(3)
Once the Act has applied to an establishment it keeps applying, even if the headcount later falls below ten. An employer cannot drop out of the Act by shrinking. Sec. 1(5)
Employers outside the Act
Private-sector employees of covered establishments are the main audience for this calculator, and the divisor of 26 applies to them. A smaller employer that was never covered may still pay gratuity voluntarily or under your contract. Those payments are worked out on a thirty-day month rather than twenty-six, which is why this calculator offers both divisors. If your contract or a settlement gives you better terms than the Act, the better terms apply. Sec. 4(5)
Which salary figure to use
Gratuity is worked out on your last drawn Basic + DA — the salary of your final month, not an average and not what you were earning when you joined. Sec. 4(2) Every raise you take before leaving therefore increases the whole payout, across all your years of service.
Take it from the earnings side of your payslip
Add Basic Salary and Dearness Allowance. Nothing else counts: not HRA, not conveyance, not special or other allowances, not performance bonus, LTA or overtime. Deductions on the other side of the slip — PF, professional tax, TDS — make no difference.
Where Dearness Allowance shows up in Indian salaries
DA is a cost-of-living component linked to the consumer price index. Whether you have one depends on who you work for:
Central and state government employees — a separate DA line, revised twice a year and quoted as a percentage of Basic.
PSUs, public-sector banks and insurers — DA under industrial or bipartite settlements, often revised quarterly.
Factory, plantation and contract-labour jobs — frequently shown as VDA, Variable Dearness Allowance, under minimum-wage notifications.
Most private-sector white-collar jobs — no DA at all. The structure is Basic, HRA and a special allowance that absorbs the rest. If there is no DA line on your slip, enter your Basic and nothing more.
Only DA that forms part of your regular wages counts. If your payslip has already folded DA into Basic, do not add it a second time.
Current salary, not joining salary
This is where people most often go wrong. Someone who joined on ₹18,000 of Basic and left on ₹52,000 uses ₹52,000 for the whole calculation, including the earliest years. If you are still employed and projecting a future exit, use this month’s payslip and treat the result as an estimate that will rise with your next increment.
Not gross, and not take-home
Gross salary includes the allowances the Act excludes, so using it overstates gratuity — often by half again. Take-home is lower still, after deductions. Neither is the right input.
Who qualifies, and after how long
Gratuity becomes payable when your employment ends after five years of continuous service — on resignation, retirement, superannuation, death or disablement. Sec. 4(1)
When five years is not required
The five-year condition does not apply where employment ends because of death or disablement caused by accident or disease. In the case of death the amount is paid to the nominee or legal heir.
Counting service in years and months
Service is rarely a whole number of years. This calculator takes either your exact joining and leaving dates, or a length of service entered as years and months — so a period like 7 years 8 months is handled properly rather than being truncated to 7. Most calculators accept whole years only, which silently costs you the round-up.
The four years and 240 days question
Continuous service is defined by days actually worked, and a year in which you worked 240 days counts as a full year of continuous service. Sec. 2A Courts have read this to mean that four years plus 240 days in the fifth year can satisfy the five-year requirement, and many employers honour it. It is settled practice rather than explicit statutory text, so treat it as something to raise with HR rather than an entitlement you can assume.
What counts as a completed year
The Act credits fifteen days of wages for each completed year of service, and for any part of a year in excess of six months. Sec. 4(2) The wording matters and is where most calculators go wrong.
16 years 4 months counts as 16 years. Four months is less than six, so it is dropped.
17 years 8 months counts as 18 years. Eight months is in excess of six, so it rounds up.
17 years 6 months counts as 17 years, not 18. Exactly six months is not in excess of six months, so it does not round up. Several well-known calculators state the opposite and overstate the payout by a full year.
This calculator applies the rule to the day. If you enter your actual joining and leaving dates, six months and one day rounds up while six months exactly does not.
When your employer must pay
Gratuity must be paid within thirty days of becoming payable. Sec. 7(3) You do not have to apply for it first — the obligation sits with the employer once your employment ends.
If payment is late, the employer owes simple interest on the amount for the period of delay. Sec. 7(3A) Gratuity is also not contingent on you serving notice, returning assets or signing a release, though employers sometimes treat it that way.
When gratuity can be withheld
Gratuity can be forfeited only in narrow circumstances. Sec. 4(6)
Where your employment was terminated for an act, wilful omission or negligence that caused damage or loss to the employer, gratuity may be forfeited to the extent of that loss — not beyond it.
Where employment was terminated for riotous or disorderly conduct or any act of violence, or for an offence involving moral turpitude committed in the course of employment, gratuity may be forfeited wholly or partly.
Ordinary resignation, poor performance, or leaving without serving full notice are not grounds for forfeiture.
How gratuity is taxed
Gratuity received by a government employee is fully exempt from income tax. For everyone else, exemption under Section 10(10) of the Income-Tax Act, 1961 is the least of three figures:
₹20,00,000
the gratuity you actually received
the amount computed under the Act’s formula
The ₹20 lakh limit is a lifetime one
That ceiling applies across your entire working life and every employer, not afresh at each job. Exemption already claimed on gratuity from a previous employer reduces what remains available now.
Pages still quoting ₹10 lakh are out of date
The ceiling was raised from ₹10 lakh to ₹20 lakh with effect from March 2018. Several widely-read calculator pages still state the old figure, or describe anything above ₹10 lakh as ex gratia. That is no longer correct.
Questions worth answering
After how many years is gratuity payable?
After five completed years of continuous service. The minimum is waived in cases of death or permanent disability, and courts have upheld four years and 240 days as sufficient to count the fifth year.
How much is tax-free?
The exemption under Section 10(10) of the Income-Tax Act, 1961 is the least of three figures: ₹20 lakh, the gratuity you actually received, and the amount worked out under the Act's formula. Whatever exceeds that is taxable at your applicable slab rate as salary income. The ₹20 lakh ceiling has applied since March 2018, when it replaced the earlier ₹10 lakh limit — pages still quoting ₹10 lakh are out of date. It is also a lifetime limit across all your employers rather than a fresh allowance at each job, and gratuity paid to government employees is exempt in full.
Which salary components are used?
Only Basic pay plus Dearness Allowance, taken from the earnings side of your payslip. HRA, conveyance, special or other allowances, performance bonus, LTA and overtime do not enter the gratuity base, and deductions such as PF, professional tax and TDS make no difference. If your payslip has no DA line — most private employers do not pay one — your Basic alone is the figure.
What is DA and where do I find it on my payslip?
Dearness Allowance is a cost-of-living component tied to the consumer price index, shown as its own line on the earnings side of your payslip. You will have one if you work for central or state government, a PSU, a public-sector bank or insurer, or many unionised factory jobs — central government DA is revised twice a year and quoted as a percentage of Basic. On factory and contract-labour slips it may appear as VDA, Variable Dearness Allowance. Most private-sector white-collar payslips have no DA line at all; in that case your Basic alone is the figure to enter. If DA has already been merged into your Basic, do not count it twice.
Do I use my current salary or my salary when I joined?
Your current one. Gratuity is computed on the last drawn Basic + DA, which means the final month you were paid, applied across your entire tenure. Someone who joined on ₹18,000 of Basic and left on ₹52,000 uses ₹52,000 for every year of service, including the first. If you are still employed, use this month's payslip and treat the figure as an estimate that rises with each increment.
Should I enter gross salary or take-home?
Neither. Gross includes HRA and the other allowances the Act excludes, so entering it overstates your gratuity, often by around half again. Take-home is lower than both, since deductions have already come off. The figure you want sits between them: Basic + DA only.
What is 15/26?
Fifteen days of wages are credited per completed year of service. Twenty-six is the working-day divisor (thirty calendar days less four weekly offs). Together they mean annual gratuity is roughly 15/26 of one month's Basic + DA.
I have worked 16 years and 4 months. How many years count?
Sixteen. A part year counts as a full year only when it is in excess of six months, so four months is dropped. Seventeen years and eight months would count as eighteen. Note the wording carefully: seventeen years and exactly six months counts as seventeen, not eighteen — the Act says "in excess of six months", so an exact six months does not round up. Some calculators get this wrong and overstate the payout by a full year.
Does this cover central government employees?
No. This calculator applies the Payment of Gratuity Act, 1972, which covers establishments with ten or more employees. Central government civil pensioners fall under the CCS (Pension) Rules, where retirement gratuity is worked out from six-monthly periods of qualifying service and capped differently. Use the government pensioners' portal for that.
What about fixed-term employees?
Under the Code on Social Security, 2020 (in force from November 2025), fixed-term employees qualify after just one year of service. Regular employees still fall under the five-year rule.
Do I have to sign up or give my phone number?
No. There is no account, no email field, no phone number and no OTP. Several bank and fintech gratuity calculators ask for your name, email and mobile number before showing the result, because the calculator is a lead-generation form. This one just calculates.
Can I calculate gratuity from my joining and leaving dates?
Yes, and that is the default. Enter your date of joining and last working day and the exact service period is worked out to the day, including whether a part year crosses the six-month threshold. Most calculators only accept whole years, which loses that precision. You can switch to entering years and months directly if you prefer.
Can I print my gratuity calculation?
Yes. “Print estimate” produces a one-page summary showing your inputs, the formula as applied, the amount in words and the tax treatment, which you can save as a PDF. It is clearly marked as an estimate and not an official document — it is for checking against what your employer pays, not for presenting as a company record.
Is gratuity calculated on basic salary or CTC?
On Basic salary plus Dearness Allowance only — never on CTC and never on gross pay. Many employers show a gratuity line inside cost-to-company, usually around 4.81% of Basic + DA, which is the annual cost of funding 15 days’ wages a year. That line is an accounting entry, not money you can draw: appearing in your CTC does not make gratuity payable before you complete the qualifying service.
How much gratuity will I get after 5 years?
Five completed years earn 75 days of wages — 15 days for each year — divided by 26. On a Basic + DA of ₹50,000 that is ₹1,44,231. On ₹30,000 it is ₹86,538. Five years is the first point at which gratuity becomes payable at all, so this is the smallest amount most people will ever receive under the Act.
Who gets the full ₹20 lakh gratuity?
₹20 lakh is a ceiling, not an entitlement — it is the most the Act will pay and the most that can be exempt from tax, not a figure anyone receives for turning up. Reaching it needs a high Basic + DA combined with long service: roughly ₹1,15,000 of monthly Basic + DA across 30 completed years, or a larger Basic over fewer years. Most employees are well below it, which is why the calculator usually reports the gratuity as fully exempt.
Is anything I enter recorded?
No. Every calculation runs in your browser. There is no server, no database, no cookies tracking inputs, and no analytics reading form fields. If you close the tab, the numbers disappear with it.
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GRATUITY ESTIMATE
Particulars
Monthly Basic + DA
Period of service
Completed years applied
Employer coverage
Computation
Daily wage (Basic ÷ divisor)
Days credited (15 per completed year)
Tax treatment
Exempt under Section 10(10)
Taxable as salary income
Status
The exemption is the least of ₹20,00,000, the gratuity actually received, and the amount computed under the Act’s formula. The ₹20,00,000 is a lifetime limit across all employers — any exemption claimed on earlier gratuity reduces it.
ESTIMATE ONLY — NOT AN OFFICIAL DOCUMENT. Not issued by any employer or authority, and not legal or tax advice. Figures are indicative. Verify your entitlement with HR or a qualified advisor.
gratuity-calculator-india.vercel.app · Built by Rohit Wadhwa
ILLUSTRATIVE — NOT LEGAL OR TAX ADVICE.Verify your exact entitlement with HR or a qualified advisor. Rules and exemption ceilings change; this page reflects the position current at build time.Built by Rohit Wadhwa · Source on GitHub