Estimate gratuity under the Payment of Gratuity Act formula using basic, DA, years of service and optional salary increments.
Service tenure
Expected annual increment (project last salary)
Eligible — 10 completed years of service (minimum 5 years).
Gratuity amount
₹2,88,462
Gratuity is a lump-sum benefit paid by covered employers after qualifying continuous service. The standard Act formula uses last drawn basic plus DA, fifteen days' wages per completed year, and a divisor of 26.
Eligibility, tax exemption and any statutory ceiling can change. Confirm with your employer, the Payment of Gratuity Act, and a tax professional before making decisions.
Last updated: 12 July 2026. Gratuity rules and tax limits can change — verify with your employer and official sources.
Gratuity is a lump-sum payment made by an employer to an eligible employee after a qualifying period of continuous service, typically on resignation, retirement or other exits covered under the Payment of Gratuity Act, 1972 (and related rules).
It rewards long service and is separate from EPF contributions. Covered establishments must follow statutory eligibility and calculation norms; some employers also maintain a gratuity trust or insurance arrangement.
For most covered private-sector style calculations: Gratuity = (Basic + DA) × 15 × completed years ÷ 26.
Fifteen represents half a month's wages; dividing monthly salary by 26 converts to a daily wage under the Act's convention. Completed years usually require at least five years of continuous service for eligibility (with limited exceptions).
Worked example: Last drawn basic + DA = ₹50,000; 10 completed years → (50,000 × 15 × 10) ÷ 26 ≈ ₹2,88,462.
Use annual increment presets above if you want to project last salary before applying the formula. The results panel shows eligibility, formula amount, and a note when the commonly cited ₹20 lakh ceiling applies.
| Feature | Gratuity | EPF | NPS (retirement) |
|---|---|---|---|
| What it is | Lump-sum employer benefit after qualifying service | Monthly retirement savings with employer share | Voluntary/mandatory pension contribution account |
| Eligibility | Typically ≥ 5 years continuous service (Payment of Gratuity Act) | Covered establishments / eligible employees | Open to eligible subscribers per PFRDA rules |
| Formula / funding | (Basic + DA) × 15 × years ÷ 26 | 12% employee + employer split into EPF/EPS | Contributions grow in chosen funds until exit |
| Paid when | On exit after eligibility (resignation, retirement, etc.) | Withdrawal / retirement per EPFO rules | Partial/full withdrawal and annuity rules |
Project provident fund balance with the EPF calculator. For take-home and tax planning, see the income tax calculator.
Tax treatment of gratuity depends on employment category, coverage under the Act, and amounts received. A ₹20 lakh figure is often cited in private-sector planning tools as an illustrative ceiling — confirm current exemption limits with the Income Tax Department or a tax professional. This calculator is not tax advice.
Salaried employees estimating a possible gratuity payout at exit, HR teams explaining the Act formula, or anyone comparing retirement benefits alongside EPF.
Under the Payment of Gratuity Act, 1972, for most covered employees: Gratuity = (Last drawn basic + DA) × 15 × completed years of service ÷ 26. Fifteen days' wages for each completed year, with wages treated as monthly salary ÷ 26.
Generally employees who complete at least five years of continuous service with an employer covered under the Act. Exceptions can apply in cases such as death or disablement — confirm with HR or a labour advisor for your situation.
It usually means basic wages plus dearness allowance last drawn. Other allowances are typically excluded unless your employment contract or establishment rules say otherwise.
Completed years matter. Many payroll practices round up a fraction of six months or more to the next year. This calculator follows that common approach when you enter exact years or derive years from a joining date.
A commonly cited private-sector ceiling for tax/exemption planning is ₹20 lakh. The calculator shows both the formula amount and the amount capped at ₹20 lakh. Confirm current statutory and tax limits with official sources before relying on them.
Yes, because the formula uses last drawn salary. Use the increment presets to project how basic may grow by exit, then estimate gratuity on that projected last salary.
Tax treatment depends on whether you are a government employee, covered under the Act, and how much you receive. Exemptions and ceilings change — verify with the Income Tax Act / a tax professional. This page is illustrative only.
No. EPF is a monthly contribution fund administered via EPFO. Gratuity is a separate lump-sum benefit paid by the employer (or a trust) after qualifying service. Use the EPF calculator for provident fund projections.
Yes. Enter a joining date (optional) or use the years-of-service control. Years of service drive eligibility and the formula; joining date is a convenient way to derive tenure.
Central government and some other categories may follow different gratuity rules. This tool focuses on the widely used Payment of Gratuity Act formula for covered private-sector style calculations.
Private-sector formula commonly used is (15/26) × last drawn basic+DA × years of service (rules and rounding vary by employer coverage). Enter salary and years to see an estimate; confirm with HR/payroll.
Under the Payment of Gratuity Act, continuous service of at least five years is generally required (with exceptions such as death/disability). This calculator assumes eligibility inputs you provide — it does not decide legal entitlement.
Disclaimer: Educational illustration of a common statutory formula. Eligibility, tax and ceilings depend on your facts and current law. Not legal or financial advice.
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