Gratuity Calculator in India
Estimate gratuity from your last drawn wages and completed service. Use separate calculations for private or PSU employment and Central Government retirement.
Calculate your estimated gratuity
Choose the employee category first. The tool changes the formula, service units and ceiling automatically.
Total gratuity payable
Private / PSU employee
Enter your pay and service details to see the calculation.
How is gratuity calculated in India?
For most eligible private-sector employees, gratuity is last drawn monthly gratuity wages × 15 ÷ 26 × counted years of service, subject to the applicable ₹20 lakh ceiling. Central Government retirement gratuity is generally one-fourth of emoluments for every completed six-month period, subject to 16.5 times emoluments and ₹25 lakh.
Page contents
What is gratuity?
Gratuity is a lump-sum service benefit paid by an employer when eligible employment ends. It recognises completed service and is normally paid on retirement, resignation, superannuation, death or disablement.
For a private employee covered by the statutory framework, gratuity is commonly calculated as 15 days of last drawn wages for every counted year of service. Central Government retirement gratuity uses completed six-month periods, so it needs a different formula.
It is paid by the employer
Gratuity is not deducted from the employee's monthly salary as a contribution. A cost-to-company statement may show an estimated employer cost, but that is not the same as money already paid to the employee.
Better terms can still apply
An award, agreement or employment contract can provide gratuity on better terms. The calculator shows the standard statutory estimate, not a contractual enhancement.
Gratuity calculation formula in India
The correct formula depends on who employs you. Do not use a private-sector formula for a Central Government pension case.
For an ordinary calculation, a remaining period above six months is generally counted as one additional year.
The amount is limited to 16.5 times emoluments and the monetary ceiling. Death gratuity follows separate service slabs and is not calculated by this retirement mode.
Gratuity calculator for private employees
For service governed by the Code on Social Security, the starting wage components are basic pay, dearness allowance and retaining allowance. The statutory definition can also add back part of excluded allowances where they cross the permitted 50% level.
- Use last drawn monthly wages, not gross salary, take-home pay or annual CTC.
- Add DA only when it is actually part of pay; do not invent a DA amount where salary has none.
- Add retaining allowance where applicable, usually in seasonal establishments.
- Enter a wage add-back only after checking the complete remuneration structure under section 2(88).
- The calculator uses ₹20 lakh as the statutory private-sector ceiling; a better contractual benefit can require a separate calculation.
Unsure which salary figure belongs in the formula?
A payroll and appointment-letter review can prevent a large under-calculation.
Central Government retirement gratuity calculator
An eligible Central Government employee generally receives one-fourth of emoluments for each completed six-month period of qualifying service, subject to a maximum of 16.5 times emoluments and ₹25 lakh.
What to enter
Enter the last basic pay or emoluments and the monthly dearness allowance used for gratuity. Then enter completed qualifying service from the service record.
What this mode excludes
It does not calculate death gratuity, which uses separate service-linked slabs. State Government, defence, railway and other special rules should be checked against the relevant service rules.
When does an employee become eligible?
Eligibility and amount are two separate questions. First check whether gratuity became payable; then calculate the amount from qualifying service.
Ordinarily five years
Continuous service of at least five years is ordinarily required on resignation, retirement or superannuation.
Five years not required
The five-year condition does not apply where employment ends due to death or disablement from accident or disease.
One completed year
A fixed-term employee directly engaged by the employer is eligible after completing one year under the contract, with gratuity payable proportionately.
Continuous service rules can count authorised leave, sickness, accident, lay-off, strike, lockout and other interruptions that are not caused by the employee's fault. Actual attendance records matter where service continuity is disputed.
How service rounding changes gratuity
For an ordinary private-sector amount, a part of a year exceeding six months is counted as a completed year. Exactly six months is not “in excess of six months”, so the tool does not round it up.
| Actual completed service | Years used for amount | Reason |
|---|---|---|
| 7 years 5 months | 7 years | Remaining service does not exceed six months. |
| 7 years 6 months | 7 years | Exactly six months is not above six months. |
| 7 years 7 months | 8 years | The remaining period exceeds six months. |
| 4 years 7 months | Eligibility requires review | Amount rounding does not by itself settle the ordinary five-year eligibility condition. |
Central Government retirement gratuity is different: every completed six-month period is counted. Eight years and seven months therefore gives 17 completed half-year periods.
Is gratuity taxable?
Tax exemption and the amount payable by the employer are related but not identical. The employee category, actual receipt, formula limit, lifetime exemption used earlier and current monetary ceiling all matter.
| Employee category | Broad exemption position | What needs checking |
|---|---|---|
| Central or State Government employee | Eligible retirement or death gratuity is generally exempt under section 10(10)(i). | Confirm that the employment category falls within the government provision. |
| Private employee covered by statutory gratuity rules | Exemption is generally the least of actual gratuity, the formula amount and the available lifetime monetary limit. | Previous gratuity exemptions and any amount above the statutory formula. |
| Other employee | A separate average-salary formula and completed-year test may apply for tax exemption. | Coverage, ten-month average salary, half-month formula and lifetime limit. |
The current income-tax return validation for AY 2026-27 uses ₹20 lakh for PSU and other gratuity entries and ₹25 lakh for Central or State Government and their pensioners. That validation does not replace the full section 10(10) test.
Central Government and private-sector gratuity compared
The private-sector rules historically associated with the Payment of Gratuity Act, 1972 now operate under the Code on Social Security framework from 21 November 2025.
| Feature | Central Government Employees | Private Sector Employees |
|---|---|---|
| Calculation Formula | 1/4 × emoluments × completed six-month periods | (Last drawn gratuity wages × 15 × counted years of service) ÷ 26 |
| Maximum Gratuity Limit | ₹25 lakh | ₹20 lakh |
| Tax Exemption | Generally fully exempt under Section 10(10)(i) for eligible government gratuity | Exempt up to ₹20 lakh, subject to the applicable formula, actual receipt, earlier exemptions and other conditions |
| Minimum Qualifying Service | Five years for retirement gratuity | Five years ordinarily; one completed year for an eligible directly engaged fixed-term employee from November 2025 |
| DA Included in Calculation | Yes, under the applicable retirement-gratuity emoluments rules | Yes, where DA forms part of wages |
| Death Gratuity | Calculated using a separate slab-based formula | The ordinary five-year qualifying-service condition is waived in case of death |
| Governing Law | Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021 and applicable service rules | Code on Social Security, 2020, effective 21 November 2025; it replaced the Payment of Gratuity Act, 1972 |
Gratuity calculation examples
Private employee: 8 years 7 months
- Last gratuity wages
- ₹50,000
- Service counted
- 9 years
- Formula
- 50,000 × 15 ÷ 26 × 9
- Estimated gratuity
- ₹2,59,615
Central Government: 20 years 8 months
- Basic pay + DA
- ₹90,000
- Completed half-years
- 41
- Formula
- 90,000 × 1/4 × 41
- Estimated gratuity
- ₹9,22,500
How to claim gratuity and check payment
Keep the process factual and in writing. Your appointment letter, payslips and service record usually settle more questions than a rough salary figure.
Collect records
Keep the appointment letter, salary slips, relieving or retirement order, service record, bank details and nomination record.
Send the claim
Notify the employer with employee ID, joining and exit dates, last wages and the event that made gratuity payable.
Reconcile payment
Check eligibility, wage base, counted service, ceiling, tax deduction and payment date against the written calculation.
The employer is expected to determine gratuity when it becomes payable and arrange payment within 30 days. Interest can apply to delayed payment, subject to the law and the reason for delay. Where an employer disputes eligibility or wages, the controlling-authority route may be available.
Common gratuity calculation mistakes
Using gross salary
Private gratuity does not simply use gross pay or take-home salary. Use the statutory wage base.
Ignoring the wage add-back
Excluded allowances above the statutory 50% level can increase wages used for gratuity.
Rounding exactly six months
The private formula says a part exceeding six months, not six months or more.
Using rounding to prove eligibility
Rounded years for the amount should not automatically be used to satisfy the five-year condition.
Applying 15/26 to government service
Central Government retirement gratuity uses completed six-month periods and quarter emoluments.
Forgetting the ceiling
The formula amount can be higher than the applicable monetary maximum.
Mixing death and retirement gratuity
Central Government death gratuity has separate slabs and is outside this retirement calculator.
Treating a CTC provision as payable cash
A gratuity line in CTC is an employer-cost estimate, not an employee contribution account.
Frequently asked questions about gratuity in India
What is the gratuity formula for a private employee?
Last drawn monthly gratuity wages × 15 ÷ 26 × counted years of service. A remaining period above six months is generally rounded to one additional year.
Is gratuity payable before five years?
Regular employees ordinarily need five years. The condition is waived for death or disablement, while a directly engaged fixed-term employee can qualify after completing one year under the contract.
Are four years and seven months counted as five years?
The amount formula can round a period above six months, but eligibility remains a separate question. Do not assume amount rounding automatically meets the ordinary five-year condition.
Which salary components are used?
The current starting components are basic pay, DA and retaining allowance. Certain excluded allowances above the 50% limit may be added back under the statutory wage definition.
What is the maximum gratuity for private employees?
The calculator applies a ₹20 lakh statutory ceiling. A contract or award can provide a better benefit, with separate tax consequences.
How is Central Government retirement gratuity calculated?
One-fourth of emoluments for every completed six-month period of qualifying service, limited to 16.5 times emoluments and the applicable ceiling.
What is the Central Government gratuity ceiling?
It is ₹25 lakh from 1 January 2024 for retirement and death gratuity under the applicable Central Government rules.
Is gratuity taxable for a private employee?
The exempt amount is generally restricted by actual gratuity, the applicable formula and the available lifetime monetary limit. Prior exempt receipts can reduce the available limit.
Is government gratuity taxable?
Eligible retirement or death gratuity received by Central or State Government employees is generally exempt under section 10(10)(i), subject to the employment category.
Does notice period count as service?
Service generally runs to the actual termination date. Notice pay in lieu, breaks and disputed periods need the employment documents and applicable rules.
When should gratuity be paid?
The employer should determine the amount when it becomes payable and generally pay within 30 days. Statutory interest can apply to delay.
Can gratuity be forfeited?
Only in specified circumstances connected with damage or loss, violent or disorderly conduct, or an offence involving moral turpitude committed during employment. Dismissal alone does not make forfeiture automatic.
Rules checked for this calculator
The calculation and guide were reviewed against the legislation, current Ministry clarifications, pension rules and tax-return validation available on 3 August 2026.
Government sources
Have your calculation checked against real records
Share your appointment terms, salary structure, joining and exit dates, and the employer's gratuity working. companyji can help review the wage base, tax reporting and supporting records.