Gratuity Calculator

Determine your estimated gratuity amount based on your years of continuous service and last drawn basic salary.

Applicability

Covered Under Act

Not Covered Under Act

If your company has 10 or more employees, it is typically covered.

Basic Salary + DA

Years of Service

Calculated Gratuity Amount 0.00

Formula Used:

(15 × Basic Salary × Years of Service) ÷ 26

Note: For covered employees, any service over 6 months is rounded up to a full year. The maximum tax-exempt limit for gratuity is ₹20 Lakhs.

edit_note By Utility Spark Editorial Team

verified Reviewed: Jul 28, 2026

update Updated: Jul 28, 2026

commit v2.0.0

schedule 3 min read

Gratuity is a statutory right for every employee who has completed five or more years of continuous service with an employer — a lump sum payment on resignation, retirement, or death/disablement, calculated as a function of last drawn salary and years of service. Many employees approach resignation without knowing exactly what gratuity amount they are entitled to, leaving them unable to verify whether their employer's payout is correct. The Payment of Gratuity Act, 1972 prescribes a precise formula: (Last drawn basic + DA) × 15/26 × Number of completed years of service. The divisor is 26 (working days in a month) and the multiplier is 15 (days of gratuity per year of service). The Utility Spark Gratuity Calculator applies this formula directly. Enter your last drawn basic salary plus DA, and total years of service. The calculator shows your gratuity entitlement and the tax-exempt portion (currently capped at ₹20 lakh for non-government employees under the Income Tax Act).

lightbulb When to use this tool

check_circle Verifying your gratuity calculation before accepting a Full and Final Settlement from your employer.
check_circle Planning financially for resignation after 5 years by knowing your gratuity entitlement in advance.
check_circle Checking eligibility — gratuity requires 5 completed years, with a special calculation for the last partial year.
check_circle Understanding the tax-exempt portion of your gratuity to plan your income tax for the year of receipt.

Why use our tool?

Statutory Formula — 15/26 × Last Salary × Years

The Payment of Gratuity Act formula is: Gratuity = (Basic + DA) × 15 ÷ 26 × Completed years of service. The 26-day divisor represents the average number of working days in a month (excluding Sundays). This is the formula that applies to all employees covered under the Act.

5-Year Minimum Eligibility Check

Gratuity requires a minimum of 5 years of continuous service. The last year is rounded up if 6 or more months have been completed (e.g. 5 years 7 months counts as 6 years; 5 years 4 months counts as 5 years). The calculator applies this rounding correctly.

Tax Exemption Limit Applied

Gratuity received from private sector employers is tax-free up to ₹20 lakh (revised in 2019). Any gratuity above this limit is taxable as salary income. The calculator highlights the exempt portion and taxable excess.

How it works

Enter your last drawn basic salary + DA per month.

Enter your total years of service (completed years, with partial year handled automatically).

The calculator displays your gratuity entitlement, tax-exempt amount, and any taxable excess.

If your years of service have a partial year component, enter the exact months too.

Examples

science 10-Year Employee Gratuity

Basic + DA: ₹45,000/month | Service: 10 years 8 months (rounds to 11 years)
Formula: ₹45,000 × 15 ÷ 26 × 11 = ₹2,85,577
Tax exempt: Full ₹2,85,577 (below ₹20 lakh limit)

Frequently Asked Questions

Is gratuity applicable if I resign before 5 years? expand_more

No. Under the Payment of Gratuity Act, 1972, a minimum of 5 years of continuous service is mandatory. If you resign before completing 5 years, you forfeit gratuity entitlement entirely. Exception: gratuity is payable before 5 years if the employee dies or becomes permanently disabled due to an accident or disease, regardless of years of service.

What counts as 'basic + DA' for gratuity calculation? expand_more

For gratuity calculation, the base is your last drawn basic salary plus Dearness Allowance (DA). Other components — HRA, special allowance, bonus, LTA, medical allowance, performance incentives — are excluded from the gratuity base. This is a common area where employers may attempt incorrect calculations. Your offer letter or payslip should show the basic salary component separately.

Can my employer forfeit my gratuity? expand_more

The Gratuity Act allows forfeiture only in specific circumstances: if the employee is terminated for wilful omission or negligence causing damage or loss to the employer (and only to the extent of the damage), or if the employee is terminated for disorderly conduct or violence on the employer's property. Forfeiture is not a blanket right — it requires specific proven misconduct and is subject to legal challenge.

Is gratuity different for government employees? expand_more

Yes. Government employees (Central and State government) are covered under different rules — the Central Civil Services (Pension) Rules or equivalent state rules — not the Payment of Gratuity Act. Government employees receive gratuity calculated under a different formula and their tax exemption was ₹20 lakh (same cap, revised per 7th Pay Commission recommendations). This calculator is designed for private sector employees under the Gratuity Act.