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Gratuity formula
Gratuity = Last basic + DA × 15 ÷ 26 × Years of service
If your final year has more than 6 months, it counts as a full year (10 years 7 months = 11 years).
If your employer is not covered by the Act, the formula uses 15/30 and only completed years count.
Gratuity at a glance
Gratuity for common salaries and service periods
Basic + DA
5 years
10 years
20 years
₹30,000
₹86,538
₹1,73,077
₹3,46,154
₹50,000
₹1,44,231
₹2,88,462
₹5,76,923
₹1,00,000
₹2,88,462
₹5,76,923
₹11,53,846
Gratuity in your CTC
Many employers show gratuity (about 4.81% of basic) as part of your CTC even though you receive it only when you leave. See how it affects your monthly pay with the in-hand salary calculator.
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Frequently asked questions
How is gratuity calculated?+
For employers covered by the Payment of Gratuity Act: last drawn basic + DA × 15 ÷ 26 × years of service. For ₹50,000 and 10 years 7 months of service (counted as 11 years), gratuity is ₹3,17,308.
Am I eligible for gratuity?+
Usually after 5 years of continuous service with the same employer. It is also paid on death or disability without the 5-year condition. Under the new labour codes, fixed-term employees can become eligible after one year.
Is gratuity taxable?+
For private-sector employees, gratuity up to ₹20 lakh received over your career is tax-free; anything above is taxed as salary. For government employees, gratuity is fully exempt.
Why 15/26?+
Gratuity is 15 days’ wages for each year of service, and a month is treated as 26 working days. So one year earns 15/26 of a month’s basic + DA.