Gratuity Calculator 2026: Formula, Eligibility and Tax

Gratuity is a lump sum your employer pays when you leave after years of service. Enter your last monthly basic pay + DA and your years of service.

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Gratuity formula

Gratuity = last drawn basic + DA × 15 ÷ 26 × completed years of service. A part-year of more than 6 months counts as a full year. Example: ₹50,000 a month for 10 years gives ₹2,88,462.

Who is eligible?

• Permanent employees usually need 5 years of continuous service.
• Under the Labour Codes in force from 21 November 2025, fixed-term employees qualify after 1 year.
• The service condition does not apply on death or disablement.

Frequently asked questions

Is gratuity taxable?

For private-sector employees covered by the gratuity law, up to ₹20 lakh in a lifetime is tax-free. Anything above that is taxed at your slab rate.

Why is it divided by 26?

The law treats a month as 26 working days, and you earn 15 days’ wages for each year of service.

An estimate for private-sector employees. Government employees follow different rules.