Calculator
Gratuitycalculator
Gratuitycalculator
Put in the last drawn basic and DA and the length of service to see the gratuity payable under the Payment of Gratuity Act, how many years count, and how much of it is tax-free.
Figures reviewed September 2026. Statutory rates change; confirm with the notification before filing.
Gratuity payable
Years that count
7 years and 8 months rounds up
8
Days of wages per year
15 days of a 26-working-day month
15 ÷ 26
Gratuity
₹1,84,615
Tax-free for non-government employees
₹1,84,615
Taxable
₹0
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<p style="font-size:12px"><a href="https://kuzhu.in/resources/gratuity-calculator?utm_source=embed">Free gratuity calculator by Kuzhu HRMS</a></p>How gratuity is worked out
15 ÷ 26 × years
For employers covered by the Act, gratuity is last drawn basic plus DA, times 15, divided by 26, times years of service. The 26 is the working days in a month, so each year earns 15 working days of wages.
Six months rounds up
A part-year of more than six months counts as a full year. Seven years and eight months is eight years; seven years and six months is seven.
Five years first
Gratuity becomes payable on resignation or retirement after five years of continuous service. On death or disablement there is no minimum. Several High Courts have counted four years and 240 days worked in the fifth year as five years.
Not covered by the Act
Where the employer is outside the Act, any gratuity paid is usually half a month of the average salary over the last ten months per completed year, and only completed years count.
The ₹20 lakh ceiling
The Act requires no more than ₹20 lakh. Non-government employees get the same amount tax-free under section 10(10); anything an employer pays above it is taxed as salary. Government employees are exempt in full.
Fixed-term employees
The Code on Social Security extends gratuity to fixed-term employees after one year of service, pro rata. Check the rules your state has notified for the date it applies from.
Questions people ask
How is gratuity calculated for 7 years 8 months of service?
Eight years count, because the eight months are more than six. With last drawn basic and DA of ₹40,000 a month, gratuity is ₹40,000 × 15 ÷ 26 × 8, which is ₹1,84,615.
Is gratuity paid if I resign before five years?
Not under the Act, unless the exit is due to death or disablement. Some High Courts have treated four years and 240 working days in the fifth year as five years of continuous service, and fixed-term employees qualify after one year under the Code on Social Security, as notified.
Why is gratuity shown in my CTC?
Many employers set aside 4.81% of basic every month as a gratuity provision and include it in CTC. That is 15 ÷ 26 ÷ 12. It is paid only when you become eligible, so it never reaches your monthly salary.
Is gratuity taxable?
For non-government employees, gratuity received on retirement or resignation is tax-free up to ₹20 lakh over a working life. Amounts above that are taxed as salary. Gratuity received while still in service is fully taxable.
When must gratuity be paid?
Within 30 days of it becoming payable. Late payment carries simple interest at the rate the government notifies, and the employee can apply to the controlling authority under the Act.
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In Kuzhu
Kuzhu computes gratuity in the full and final settlement from the employee's service dates and last drawn wages, counts the years the way the Act does, and carries the provision in the salary register every month.
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