Free Gratuity Calculator – Estimate Your Gratuity Payout

How Gratuity Is Calculated Under the 15/26 Formula

Gratuity is a lump sum an employer pays you for long service, and this calculator estimates it using the formula prescribed under the Payment of Gratuity Act, 1972. Enter your last drawn monthly salary — basic pay plus dearness allowance, not your full CTC — along with your completed years of service, and the payable amount appears immediately. Employees planning a resignation, anyone reviewing a full-and-final settlement that looks lower than expected, people approaching retirement, and HR teams preparing exit paperwork all need this figure. It is money you have already earned, and a surprising number of people leave a job without checking whether they received the right amount. The formula is gratuity = (last drawn salary × years of service × 15) ÷ 26. The 15 represents fifteen days of wages credited for every completed year, and the 26 is the number of working days in a month the Act uses, excluding the four Sundays. Dividing your monthly salary by 26 gives a daily wage, and multiplying by 15 gives the per-year accrual — on a ₹50,000 salary that is ₹28,846 for each year served. Part years matter: service beyond six months in the final year is generally rounded up to a full year, so 10 years and 8 months counts as 11. Here is the arithmetic. Suppose your last drawn basic plus DA is ₹50,000 and you served 10 completed years. Gratuity = (50,000 × 10 × 15) ÷ 26 = 75,00,000 ÷ 26 = ₹2,88,462. Stay two more years and at the same salary it rises to ₹3,46,154, since each extra year adds that ₹28,846 accrual. A longer example: someone on ₹80,000 with 22 years of service receives (80,000 × 22 × 15) ÷ 26 = ₹10,15,385. Note that a salary rise late in your tenure lifts the entire payout, because the formula uses your last drawn salary across all your years, not an average. The practical uses are straightforward. An engineer on ₹49,000 basic with four years and nine months at a company can see that waiting three more months to cross the five-year threshold is worth ₹1,41,346 rather than nothing. Someone comparing two offers can factor accrued gratuity they would forfeit by leaving early into the decision. A retiring employee can check the settlement letter against the formula before signing. And a small-business owner with ten or more employees, which is when the Act applies, can budget the liability building on their books each year. A family handling a deceased relative's employment dues can check the entitlement too, since the five-year condition does not apply in that situation and the amount is often overlooked during a difficult time. A few rules decide whether you get anything at all. Five years of continuous service is generally required, with the condition waived only in cases of death or disablement — leaving at four years and eleven months usually means forfeiting the entire amount, which is the single most expensive timing mistake in Indian employment. The tax-exempt ceiling is ₹20,00,000 across your working life, and any excess is taxable. Also be careful which salary you enter: gratuity uses basic plus dearness allowance only, so using your gross or CTC will overstate the result substantially, sometimes by double. Employees outside the Act's coverage and government employees may follow a different day count or component definition. This is an estimate rather than a binding figure, and it is not legal or tax advice; confirm the exact amount with your HR or payroll team before you plan around it. Everything runs in your browser, so your salary details never leave your device.

Gratuity Calculator Formula & Method

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