Gratuity is a lump sum an employer pays for long service. This tool applies the standard Payment of Gratuity Act formula so you can estimate the amount from your last drawn Basic plus DA and the number of years you have served.
The formula
The statutory formula uses 15 days' wages for each completed year, with a month treated as 26 working days:
Gratuity = 15 × Last (Basic + DA) × Completed years ÷ 26
Years are counted as whole completed years. For example, with a last drawn Basic + DA of ₹40,000 and 6 completed years:
- Calculation = 15 × ₹40,000 × 6 ÷ 26
- = ₹36,00,000 ÷ 26 = ₹1,38,462
When this helps
- Resignation planning — estimate the gratuity due when you leave after five or more years.
- Retirement — project the lump sum you can expect.
- Offer comparison — factor long-term benefits into a decision, not just the monthly figure.
Eligibility and tax caveats
Gratuity eligibility generally requires at least 5 completed years of continuous service with the same employer (waived in cases of death or disablement). The statutory tax-exempt cap is ₹20,00,000 — amounts above this may be taxable depending on your category and the rules in force. This tool gives an estimate using the standard formula and is not tax or legal advice; confirm the exact figure and treatment with your employer. To estimate the cost of leaving before your notice ends, use the notice period buyout calculator, and the CodeBegun career guides cover planning a resignation.