Gratuity Calculator 2026 — Payment of Gratuity Act
Work out exactly how much gratuity you’re entitled to when you leave your job, based on your last drawn salary and years of service — for employees covered and not covered under the Payment of Gratuity Act, 1972.
Covered or Not Covered?
Organisations with 10 or more employees are generally covered under the Payment of Gratuity Act, 1972, which uses a fixed statutory formula. Employees at organisations outside the Act’s scope are usually still paid gratuity under company policy, often using a slightly different formula. Pick the one that matches your employer.
Covered Employee Gratuity Calculator
Enter your salary and service details to get your statutory gratuity amount
Include only basic pay and dearness allowance — exclude bonuses, HRA, and other allowances.
If the extra months in your final year exceed 6, that year is rounded up to a full year, as per the Act.
Gratuity above ₹20 lakh (or your actual entitlement, whichever is lower) is taxable as salary income.
Covered Employee Result
Gratuity amount, exempt portion, and taxable portion
Fill in your salary and service details, then click Calculate My Gratuity to see your entitlement.
Non-Covered Employee Gratuity Calculator
Enter your salary and service details to get your estimated gratuity amount
Check your company’s gratuity policy — most use basic pay and dearness allowance only.
Rounding conventions vary by employer — this calculator rounds up only when extra months exceed 6, matching common practice.
Gratuity above ₹20 lakh (or the amount calculated under the statutory formula, whichever is lower) is taxable as salary income.
Non-Covered Employee Result
Gratuity amount, exempt portion, and taxable portion
Fill in your salary and service details, then click Calculate My Gratuity to see your entitlement.
Gratuity Rules at a Glance
Key figures under the Payment of Gratuity Act, 1972. Always confirm your exact entitlement against your employer’s HR policy and the latest gov.in notifications, as thresholds can change.
| Item | Figure | Notes |
|---|---|---|
| Minimum qualifying service | 5 years | Waived on death or disablement |
| Covered-employee formula | 15 × salary × years ÷ 26 | 26 = working days in a month |
| Common non-covered formula | 15 × salary × years ÷ 30 | Company policy, not statutory |
| Rounding threshold | > 6 months | Rounds final year up to a full year |
| Tax exemption cap | ₹20,00,000 | Lowest of actual, cap, or formula amount |
| Government employees | Fully exempt | No tax on gratuity received |
Gratuity Calculator FAQ
Everything employees ask before working out their gratuity entitlement in 2026.
Gratuity is a lump-sum benefit paid by an employer to an employee as a token of appreciation for continuous service. Under the Payment of Gratuity Act, 1972, an employee becomes eligible after completing at least 5 years of continuous service with the same employer, except in cases of death or disablement, where the 5-year requirement is waived.
For employees covered under the Payment of Gratuity Act, gratuity is calculated as (15 × last drawn monthly salary × completed years of service) divided by 26, where 26 represents the working days in a month. For employees not covered under the Act, employers commonly use a similar formula but divide by 30 instead of 26, though this varies by company policy.
For employees covered under the Act, if an employee has worked more than 6 months in their final year of service, that year is rounded up to a full year; 6 months or less is ignored. For employees not covered under the Act, employers often round the service period to the nearest full year using a similar convention, though exact rounding practices can differ by company.
Gratuity received by government employees is fully exempt from income tax. For employees covered under the Payment of Gratuity Act working in the private sector, the exemption is the lowest of the actual gratuity received, ₹20 lakh, or the amount calculated under the statutory formula. Any amount above this exempt limit is taxable as salary income.
For employees covered under the Payment of Gratuity Act, last drawn salary generally means basic pay plus dearness allowance (DA) only — it excludes bonuses, commissions, HRA, and other allowances. Some employers may define this differently for employees not covered under the Act, so it’s worth checking your company’s gratuity policy.
An employer can only forfeit gratuity, wholly or partly, if the employee’s services were terminated for an act of wilful omission, negligence causing loss or damage to the employer’s property, riotous or disorderly conduct, or an offence involving moral turpitude committed during employment. Outside these specific circumstances, gratuity cannot be withheld once an employee meets the eligibility criteria.