Gratuity Calculator
Calculate the gratuity you're entitled to under India's Payment of Gratuity Act, 1972, with eligibility checks including the 4-years-240-days rule.
Completed 5 or more years of continuous service.
| Service duration | 6y 1m 0d |
| Years used in formula | 6 |
| Monthly wage (Basic + DA) | ₹30,000 |
Formula: Gratuity = 15 × (Basic + DA) × Years ÷ 26
How gratuity is calculated
Gratuity is a statutory benefit for employees who complete at least 5 years of continuous service. It's paid as a lump sum when you leave your employer, whether by resignation, retirement, or superannuation, and it does not depend on your employer's discretion once you're eligible.
The formula uses only your Basic salary plus Dearness Allowance (DA), not your full CTC or gross salary. "15" stands for 15 days of wages for every completed year of service, and "26" is the standard number of working days assumed in a month under the Act. If your service includes a part-year of more than 6 months, that part-year is rounded up to a full year for the calculation.
Eligibility normally requires 5 full years of continuous service, but courts have consistently held that completing 4 years and 240 days (190 days for establishments on a 5-day work week, or for underground mine workers) counts as a completed 5th year, making you eligible early. This calculator checks both the standard 5-year rule and the 240/190-day exception automatically based on your dates of joining and leaving.
Frequently asked questions
What is gratuity?
Gratuity is a lump-sum payment an employer makes to an employee as a token of appreciation for long, continuous service. In India it is governed by the Payment of Gratuity Act, 1972. It is paid on resignation, retirement, superannuation, death, or disablement.
Who is eligible for gratuity?
An employee who has completed at least 5 years of continuous service with the same employer is eligible. The 5-year requirement is waived if service ends due to death or disablement. Courts have held that 4 years and 240 days (190 days for a 5-day week or underground mines) counts as the 5th completed year.
Is DA (Dearness Allowance) included?
Yes. The wage used in the gratuity formula is Basic Salary + Dearness Allowance (DA). DA is added to basic before applying the 15/26 formula.
Is HRA included?
No. House Rent Allowance (HRA), conveyance, bonus, overtime, commissions, and other allowances are not counted. Only Basic + DA is used to calculate gratuity.
Is gratuity taxable?
For employees covered by the Payment of Gratuity Act, gratuity is exempt from income tax up to the statutory limit (₹20,00,000 as of recent rules), or the actual gratuity received, or 15 days' salary for each completed year, whichever is lowest. Amounts above the exemption limit are taxable. Government employees generally receive fully tax-free gratuity. Always confirm current limits with a tax advisor.
What happens if I leave before 5 years?
Generally, no gratuity is payable if you leave before completing 5 years of continuous service. The exception is death or disablement, where gratuity is paid regardless of tenure. If you have completed 4 years and 240 days (or 190 days), the 5th year is treated as complete and you may still be eligible.
How is the gratuity amount calculated?
Gratuity = (15 × (Basic + DA) × Number of years of service) ÷ 26. Here 15 represents 15 days' wages for each completed year and 26 is the assumed number of working days in a month. A part of a year in excess of 6 months is rounded up to a full year.
What is the 4 years 240 days rule?
Even though the Act mentions 5 years, several court rulings treat 4 years and 240 days of service in the 5th year as a completed 5th year for establishments working a 6-day week. For a 5-day week or underground mine workers, the threshold is 190 days. This calculator applies whichever pattern you select.