Gratuity Calculator 2026: Calculate Gratuity Online in India

Get Your Gratuity Calculation in Seconds

Use the ArthikDisha Gratuity Calculator to calculate your gratuity amount quickly and understand how much gratuity you may be entitled to based on your salary and completed years of service.

The calculator is designed to cover the important rules applicable to gratuity calculation in India, including the standard 15/26 gratuity formula, eligibility, fixed-term employment, the 50% wage rule and the tax treatment of gratuity.

Whether you are a salaried employee, a private-sector employee or a fixed-term employee, this gratuity calculator online can help you estimate your gratuity before you leave your job or plan your retirement.

ArthikDisha Gratuity Calculator

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How Is Gratuity Calculated in India?

For an employee covered by the standard gratuity formula, gratuity is generally calculated as:

Gratuity = Last Drawn Wages × 15/26 × Completed Years of Service

Here:

• Last Drawn Wages generally means the wages considered for gratuity purposes.
• 15 represents 15 days’ wages for each completed year of service.
• 26 represents the assumed 26 working days in a month.
• Completed Years of Service means the years counted according to the applicable gratuity rules.

For example, if the wages considered for gratuity are ₹50,000 and the employee has completed 10 years of service:

Gratuity = ₹50,000 × 15/26 × 10

Gratuity = ₹2,88,462 approximately

The actual amount can differ depending on the employee’s category, service period, wages and applicable statutory rules.

What Is Gratuity?

Gratuity is a lump-sum amount paid by an employer to an eligible employee as a benefit for qualifying service. It is generally associated with long-term employment and becomes payable when the conditions prescribed under the applicable gratuity law are satisfied.

The gratuity provisions are now part of the Code on Social Security, 2020. For monthly-rated employees, the Code specifies that 15 days’ wages are calculated by dividing the last drawn monthly wages by 26 and multiplying the result by 15.

Gratuity calculation therefore needs to consider not only the traditional formula but also the applicable rules relating to wages, eligibility and different categories of employees.

Gratuity Calculation Formula

The standard gratuity formula is:

Gratuity = Last Drawn Wages × 15/26 × Number of Years of Service

This is the formula most employees encounter when calculating their gratuity.

What Does 15/26 Mean in Gratuity Calculation?

The 15/26 factor is used because gratuity for each completed year is calculated at the rate of 15 days’ wages, while a month’s wages are conventionally divided by 26 days for this calculation.

Therefore:

15 days’ wages = Monthly wages × 15/26

For example, if the last drawn wages are ₹60,000:

₹60,000 × 15/26 = ₹34,615

If the employee has 12 qualifying years of service:

₹34,615 × 12 = ₹4,15,385 approximately

This explains why the 15/26 gratuity formula is central to gratuity calculation.

How Are Years of Service Counted for Gratuity?

The number of years of service is important because gratuity is calculated for each qualifying year of service. Under the standard rule, a completed year of service, or a part thereof in excess of six months, is generally counted as one year for gratuity calculation.

For example:

• 5 years and 4 months → 5 years
• 5 years and 7 months → 6 years
• 10 years and 3 months → 10 years
• 10 years and 8 months → 11 years

The applicable treatment can differ for specific categories of employees, so the relevant employment circumstances should be considered.

Gratuity Eligibility

Gratuity eligibility depends on the employee’s category and the circumstances under which employment ends.

For employees covered by the standard eligibility rule, gratuity generally becomes payable after the prescribed qualifying period of service when employment ends due to circumstances such as:

• Retirement
• Resignation
• Termination
• Superannuation

The five-year condition does not apply in certain situations, including death or disablement. Fixed-term employees also have specific gratuity provisions under the current framework.

Gratuity Eligibility for Fixed-Term Employees

Fixed-term employees have specific provisions under the current gratuity framework. An eligible fixed-term employee can qualify for gratuity after completing the applicable period of service, and gratuity for such employees can be calculated on a pro-rata basis according to the applicable rules.

This is important because the traditional five-year rule should not automatically be applied to every employee category. If you are a fixed-term employee, use the calculator’s appropriate employment category rather than assuming that the standard permanent-employee rule applies.

Gratuity in Case of Death or Disablement

The five-year service condition is not required in cases involving death or disablement.

In such cases, gratuity may become payable even when the employee has not completed five years of service. The calculation and payment should be determined according to the applicable legal provisions and the circumstances of the employee.

Which Salary Is Used for Gratuity Calculation?

One of the most important parts of gratuity calculation is determining the wages considered for gratuity purposes. It is not always correct to simply enter the employee’s total monthly CTC.

The applicable wage definition needs to be considered, including the treatment of basic wages, dearness allowance and other components under the current framework.

This is particularly important because the 50% wage rule can affect the wages used for statutory calculations.

What Is the 50% Wage Rule?

Under the current wage framework, if certain allowances and benefits exceed 50% of total remuneration, the excess amount is added back to wages for statutory purposes. This can affect calculations connected with gratuity and other labour-law benefits.

Example of the 50% Wage Rule

Suppose an employee’s total remuneration is ₹80,000 per month.

If the main components counted as wages are ₹35,000 and the remaining allowances are ₹45,000, the wage components may need to be examined under the applicable 50% rule.

50% of total remuneration = ₹80,000 × 50% = ₹40,000.

The allowances are ₹45,000, which exceeds the 50% threshold of ₹40,000 by ₹5,000.

Therefore, ₹5,000 may be added back to the ₹35,000 wage components, making the statutory wages:

₹35,000 + ₹5,000 = ₹40,000 per month.

So, for statutory calculations such as gratuity, the applicable wage may be ₹40,000 rather than simply ₹35,000.

In simple terms:
Total remuneration = ₹80,000
50% threshold = ₹40,000
Allowances = ₹45,000
Excess = ₹5,000
Revised statutory wages = ₹35,000 + ₹5,000 = ₹40,000

Gratuity Calculator for Private Employees

Private-sector employees often want to know:

“How much gratuity will I receive when I leave my job?”

The answer depends on factors such as:

• Last drawn wages
• Completed years of service
• Whether the employee is covered by gratuity provisions
• The reason for cessation of employment
• Applicable wage rules
• Any applicable statutory ceiling

For a private employee following the standard formula, the basic calculation is:

Last Drawn Wages × 15/26 × Qualifying Years of Service

Our gratuity calculator for private employees provides an easy way to estimate the amount using these inputs.

Gratuity Calculation Examples

Example 1: Employee With 5 Years of Service

Suppose:

• Last drawn wages = ₹40,000
• Qualifying service = 5 years

Gratuity:

₹40,000 × 15/26 × 5

= ₹1,15,385 approximately

Example 2: Employee With 10 Years of Service

Suppose:

• Last drawn wages = ₹60,000
• Qualifying service = 10 years

Gratuity:

₹60,000 × 15/26 × 10

= ₹3,46,154 approximately

Example 3: Employee With 15 Years of Service

Suppose:

• Last drawn wages = ₹75,000
• Qualifying service = 15 years

Gratuity:

₹75,000 × 15/26 × 15

= ₹6,49,038 approximately

These examples demonstrate how the gratuity formula works. The actual amount payable should be determined using the applicable wage and eligibility rules.

How Much Gratuity After 5 Years?

For an employee completing five qualifying years, gratuity under the standard formula can be calculated as:

Gratuity = Last Drawn Wages × 15/26 × 5

Last Drawn Wages	Approx. Gratuity for 5 Years
₹30,000	₹86,538
₹40,000	₹1,15,385
₹50,000	₹1,44,231
₹60,000	₹1,73,077
₹75,000	₹2,16,346
₹1,00,000	₹2,88,462

These are illustrative calculations using the standard 15/26 formula.

How Much Gratuity After 10 Years?

For 10 qualifying years:

Gratuity = Last Drawn Wages × 15/26 × 10

Last Drawn Wages	Approx. Gratuity for 10 Years
₹30,000	₹1,73,077
₹40,000	₹2,30,769
₹50,000	₹2,88,462
₹60,000	₹3,46,154
₹75,000	₹4,32,692
₹1,00,000	₹5,76,923

The table is intended for illustration. The actual gratuity payable depends on the applicable statutory rules and the employee’s circumstances.

Is Gratuity Taxable?

Gratuity can be fully exempt, partly exempt or taxable, depending on the employee’s category and the applicable income-tax provisions. The tax treatment should therefore be considered separately from the calculation of gratuity payable by the employer.

For example, government employees can have different exemption treatment from employees covered by other categories. The statutory gratuity amount and the amount exempt from income tax are therefore not necessarily the same thing.

Employee / Gratuity category	Applicable provision under Income-tax Act, 2025	General tax treatment
Central / State Government employee	Section 19, Entry 3	Death-cum-retirement gratuity covered by the specified Government pension rules/schemes is eligible for full deduction, subject to the provision.
Defence services – retiring gratuity	Section 19, Entry 4	Retiring gratuity covered by the applicable Pension Code/Regulations is eligible for full deduction.
Employee covered by Payment of Gratuity Act	Section 19, Entry 5	Deduction is available subject to the amount calculated under the applicable gratuity legislation.
Other employees	Section 19, Entry 6	Deduction is subject to the applicable statutory/notification limit which is ₹20 lakh, and the prescribed gratuity calculation.

Gratuity Under the New Tax Regime

The choice between the old and new tax regimes does not change the basic 15/26 gratuity calculation formula.

The tax regime primarily affects how taxable income and tax liability are calculated.

If any part of gratuity is taxable, the applicable income-tax provisions should be considered to determine the tax impact.

If you want to compare your overall income-tax liability under the two regimes, you can also use the ArthikDisha Income Tax Calculator for FY 2026-27.

Gratuity Ceiling vs Income-Tax Exemption Limit

Two different concepts should not be confused:

1. Statutory gratuity ceiling

This relates to the maximum gratuity payable under the applicable gratuity law.

2. Income-tax exemption limit

This relates to the amount of gratuity that may qualify for exemption from income tax under the applicable provisions.

These limits serve different purposes.

Therefore, an employee should not assume that the statutory gratuity ceiling and the income-tax exemption limit are automatically identical.

How to Calculate Gratuity Amount Using Our Calculator

Our online gratuity calculator is designed to make gratuity calculation easier.

Step 1: Enter Your Employment Details

Select the applicable employment category and enter the relevant service details.

Step 2: Enter Your Salary Details

Enter the wages or salary amount required by the calculator. Avoid using total CTC unless it represents the relevant wages for gratuity calculation.

Step 3: Enter Your Completed Service

Enter your years and months of service. The calculator applies the relevant service-year treatment based on the information entered.

Step 4: Calculate Your Gratuity

Click Calculate Gratuity to generate the estimated gratuity amount. The result provides a quick estimate based on the information supplied.

Step 5: Review the Tax Treatment

The calculator also helps distinguish between the gratuity amount and its potential tax treatment.

Gratuity vs CTC: What Is the Difference?

Gratuity and CTC are not the same thing. CTC (Cost to Company) represents the overall cost incurred by an employer for an employee.

Gratuity is a statutory employment benefit that may become payable when the applicable eligibility conditions are satisfied. An employer may include a gratuity component in CTC, but that does not mean the employee receives that amount as monthly cash salary.

Therefore, employees should not calculate gratuity simply by taking a percentage of their CTC.

Gratuity vs Provident Fund

Gratuity and Provident Fund are two different employee benefits.

Particular	Gratuity	Provident Fund
Nature	Long-service employment benefit	Retirement savings benefit
Main basis	Qualifying wages and service	Contributions
Calculation	Generally based on 15/26 formula for standard cases	Based on employee/employer contributions and applicable rules
Payment	Subject to applicable gratuity eligibility	Subject to PF withdrawal/settlement rules

Both can form an important part of an employee’s overall retirement benefits.

Common Mistakes While Calculating Gratuity

Mistake 1: Using CTC Instead of Relevant Wages

CTC should not automatically be treated as the salary used for gratuity calculation.

Mistake 2: Ignoring the 15/26 Formula

The standard gratuity calculation is based on 15 days’ wages for each qualifying year.

Mistake 3: Ignoring the 50% Wage Rule

The applicable wage definition should be considered instead of looking only at Basic Salary.

Mistake 4: Assuming Five Years Applies in Every Case

Different rules can apply to fixed-term employees and cases involving death or disablement.

Mistake 5: Confusing Gratuity Ceiling With Tax Exemption

The statutory ceiling and income-tax exemption provisions serve different purposes.

Mistake 6: Treating the Calculator Result as a Final Employer Settlement

An online calculator provides an estimate based on the information entered. The final amount should be checked against the employer’s records and the applicable legal provisions.

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Useful ArthikDisha Calculators and Tax Guides

You may also find these ArthikDisha resources useful:

• Income Tax Calculator FY 2026-27 – Compare your income-tax liability and understand your tax position.
• HRA Calculator FY 2026-27 – Calculate your HRA exemption and taxable HRA.
• ArthikDisha Tax Utility – Use the broader tax calculation and reporting utility.
• AIS vs 26AS – Understand the difference between your Annual Information Statement and Form 26AS.
• TDS Rate Chart FY 2026-27 – Check applicable TDS rates for different payments.

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Final Takeaway

Gratuity calculation becomes much easier once you understand three key elements:

1. Relevant last drawn wages

2. The 15/26 gratuity formula

3. Qualifying years of service

For the standard calculation:

Gratuity = Last Drawn Wages × 15/26 × Qualifying Years of Service

However, gratuity eligibility, the definition of wages, fixed-term employment, death or disablement provisions, the 50% wage rule and tax treatment can affect the final outcome.

Use the ArthikDisha Gratuity Calculator to get a quick estimate and understand how your gratuity amount is calculated.

For a broader assessment of your tax liability, you can also use the ArthikDisha Income Tax Calculator and ArthikDisha Tax Utility.