Gratuity Calculator India 2026 — Calculate Your Gratuity Amount

After 5 years, you'll receive gratuity equal to (15 ÷ 26) × Last Drawn Salary × 5. For example, with ₹50,000 monthly salary: (15 ÷ 26) × 50,000 × 5 = ₹1,44,230 (approximately). This is the gross amount before taxes. After tax deduction (if applicable), you'll receive around ₹1,40,000+ depending on your regime.

No. Under the Payment of Gratuity Act, 1972, you must complete at least 5 continuous years of service to be eligible for gratuity. If you resign after 4 years, you will NOT receive any gratuity amount, regardless of your salary or performance. The 5-year minimum is non-negotiable under Indian law.

Both require 5 years of continuous service. However: (1) On voluntary resignation after 5 years, you get full gratuity as per formula. (2) On termination/retrenchment after 5 years, you get full gratuity + may get severance. (3) On termination/firing BEFORE 5 years due to misconduct, you get zero gratuity. The Act favors employees, so gratuity is payable in almost all exit scenarios after 5 years.

Gratuity is partially taxable in India. Under Section 10(10) of Income Tax Act: You receive ₹20 lakh tax-free. Any amount above ₹20 lakh is taxable as per your income slab (30% in New Regime). Example: If you receive ₹25 lakhs, ₹20L is tax-free and ₹5L is taxable at ~₹1.5L in taxes (30% slab). Government employees get complete exemption regardless of amount.

The standard formula is: Gratuity = (15 ÷ 26) × Last Drawn Salary × Years of Service. 'Last Drawn Salary' = Basic + Dearness Allowance only (NOT HRA, bonuses, or other allowances). The 15-day rule applies to covered establishments (≥10 employees). For non-covered smaller firms (<10 employees), the formula is (30 ÷ 26) × Salary × Years. Private, government, and PSU sectors all use these same formulas.

If your company has fewer than 10 employees, the Gratuity Act applies differently. You still need 5 years of service to be eligible. However, the formula changes to (30 ÷ 26) × Salary × Years instead of (15 ÷ 26). This means you get roughly double the amount compared to covered employees with the same salary and service. You can verify your establishment's employee count with your HR department.

Last Drawn Salary = Basic Salary + Dearness Allowance (DA) of your final month of service. It includes ONLY basic and DA—NOT HRA, bonus, commission, overtime, ESOP, or vehicle allowance. If your salary slip shows: Basic ₹45,000 + DA ₹15,000 + HRA ₹20,000 = Total ₹80,000. Then 'Last Drawn Salary' for gratuity = ₹60,000 (Basic + DA). This is why knowing your exact salary components matters.

Yes. Voluntary Retirement/VRS is treated like scheduled retirement. If you've completed 5 years of service, you receive full gratuity as per formula, PLUS VRS compensation (if offered). VRS packages often provide additional benefits beyond gratuity. Always review your VRS offer letter to understand total severance including gratuity, bonus, and health benefits.

If an employee dies before claiming gratuity, their legal heirs/dependents can claim it. The gratuity is payable to: (1) Widow/widower, (2) Children, or (3) Parents (if no spouse/kids). To claim, heirs need: death certificate, proof of family relationship, and nomination (if registered). Gratuity is often the largest lump sum a family receives, so keeping nominations updated is important. Contact your employer's HR to initiate the claim.

No. Gratuity cannot be withdrawn while you are still employed or before completing 5 years of service. It's only payable upon exit (resignation/retirement/termination after 5 years). Some employers allow gratuity advance or loans against gratuity, but the principal gratuity amount is locked. Once you complete 5 years and exit, you receive the full settlement immediately.

By law, gratuity should be paid within 30 days of your exit date (resignation/retirement/termination). However, delays happen if paperwork is incomplete or the final settlement is disputed. To speed up the process: (1) Ensure your HR has all documents, (2) Verify your service years, (3) Get a final settlement statement reviewed. If delayed beyond 30 days, you can escalate to the Labor Department.

Gratuity is a statutory right under the Gratuity Act, 1972. If your employer refuses: (1) Send a written notice demanding payment, (2) File a complaint with the District Labor Officer, (3) Pursue claims through industrial tribunal. Legal aid is available for disputes ≤₹20 lakhs. Most cases are resolved within 6-12 months. Many employers avoid gratuity due to accounting errors, so first verify the calculation with HR before escalating.

Each job is separate for gratuity. When you change jobs: (1) Your previous employer must pay your gratuity on exit (only if you completed 5 years there), (2) Your new job's gratuity counter resets to zero, (3) You must complete 5 years again with the new employer to be eligible. Frequently changing jobs before 5 years means zero gratuity from each employer. Plan your career moves accordingly.

Gratuity requires CONTINUOUS service of 5 years. Breaks in service (unpaid leave, extended absence, re-joining after gap) can reset your eligibility counter. Example: If you worked 3 years, left for 2 years, and rejoined, your new stint counts as fresh service from re-joining date. Some employers are lenient; others apply strict rules. Check your employment contract and company gratuity policy for break-in-service clauses.

Gratuity is a single lump sum, not a lifetime income. Rank it in your retirement plan like this: (1) EPF/Pension is primary (regular monthly), (2) Gratuity is secondary bonus (one-time), (3) NPS/PPF/Personal savings are safety nets. Gratuity alone cannot fund 20-30 year retirement. Depends on your salary: Low earners (₹25K/month, 20 years) might get ₹2.3L; High earners (₹2L/month, 25 years) might get ₹27L. Use our calculator to estimate and plan accordingly.

You're likely COVERED if your establishment has ≥10 employees. You're NON-COVERED if your company has <10 employees. Being non-covered is actually BETTER—you get (30 ÷ 26) formula instead of (15 ÷ 26), almost doubling your gratuity. Ask your HR which category your company falls under. This single detail can mean ₹1-2 lakhs difference in your final gratuity amount.

Both Old and New regimes allow ₹20 lakh gratuity exemption under Section 10(10). Tax is calculated on the excess amount. Example with ₹25L gratuity: Taxable amount = ₹5L. In New Regime: ₹5L × 30% (slab rate) ≈ ₹1.5L tax. In Old Regime: ₹5L × 31% + 4% cess ≈ ₹1.6L tax. The difference is marginal. Your ITR regime (Old/New) doesn't change the gratuity exemption, only the tax rate on excess.

Gratuity is NOT negotiable—it's a statutory entitlement under the Gratuity Act fixed by formula. Your employer cannot reduce it unilaterally. However, you CAN negotiate additional severance beyond gratuity (via VRS, severance packages, or settlement). If offered a job separation with negotiable terms, segment it: statutory gratuity is fixed, additional compensation is flexible. Always get the gratuity calculator breakdown in writing before finalizing exit terms.