The standard formula pays 15 days of wages for each completed year of service.
₹50,000 last drawn salary (Basic + DA), 10 years of service.
Monthly Salary
₹50,000
Years of Service
10
Accrual per Year
~₹28,846
Gratuity Payable
~₹2,88,462
At ₹50,000 a month, each completed year earns about ₹28,846 of gratuity, totalling roughly ₹2,88,462 after 10 years — well within the ₹20 lakh statutory maximum.
Gratuity is a lump-sum payment an employer makes to reward long, continuous service, usually paid when you leave, retire, or in certain other circumstances. In India it is a statutory benefit under the Payment of Gratuity Act, 1972, which covers establishments with 10 or more employees — meant to recognise loyalty and cushion the end of a working relationship.
Unlike monthly salary, gratuity accrues quietly in the background and is paid out only once you become eligible. For many people it forms a meaningful part of the money they receive when changing jobs late in a career or retiring.
The most common formula pays about 15 days of wages for every completed year of service. To turn a monthly salary into a daily wage, a month is treated as 26 working days, so the daily figure is the monthly salary divided by 26, and you earn roughly 15 of those days for each year.
Putting it together, the gratuity is your last drawn monthly salary multiplied by 15/26 and then by your years of service. The salary used is generally basic pay plus dearness allowance rather than your full gross package, which is an important detail when estimating the amount.
The calculator shows two figures: the accrual per year, which is the amount one completed year of service adds, and the total gratuity payable across all your years. Multiplying the per-year accrual by your tenure gives the headline figure.
Seeing the per-year accrual separately is useful because it shows how each additional year of service raises the eventual payout. It also makes clear that the figure scales directly with both your salary and how long you stay.
Most schemes require a minimum period of continuous service, often five years, before gratuity becomes payable, although events such as death or disability can waive that requirement. Until you cross the eligibility threshold, no gratuity is typically due.
Because eligibility and the way part-years are counted vary, it is worth confirming the precise rules that apply to you. Some systems round a part-year beyond six months up to a full year, while others count only completed years, which can change the total.
A frequent mistake is using gross salary instead of the qualifying basic plus dearness allowance, which inflates the estimate. Another is ignoring statutory caps: many systems limit the maximum gratuity payable and exempt only up to a certain amount from tax.
This calculator applies the raw 15/26 formula and does not impose the ₹20 lakh statutory ceiling or any tax exemption, so for a high salary or very long tenure the real payout may be capped below the figure shown. Always check the current ceiling and the tax-free limit that apply to you.
Gratuity rules, including the qualifying period, salary definition, rounding, caps, and tax treatment, differ by country and employer and can change over time. The estimate here is a general guide rather than a definitive entitlement.
For an accurate figure, especially when the amount is significant or you are planning around retirement, confirm the terms with your employer or human resources team, and consider professional advice on the tax treatment that applies to your payout.
Typically after five years of continuous service with the same employer, though events such as death or disability can waive that minimum. The exact eligibility rules depend on your jurisdiction and employer.
Many jurisdictions exempt gratuity up to a cap and tax any excess. The exemption amount and cap vary by country and by the type of employer, so check your local tax rules before assuming the full amount is tax-free.
It pays roughly 15 days of wages for each completed year of service, where a month is treated as 26 working days. So your daily wage is the monthly salary divided by 26, and you receive about 15 of those days per year worked.
Use your last drawn monthly salary, generally basic pay plus dearness allowance rather than gross pay including all allowances. Because gratuity is based on this figure, entering the wrong salary component is a common source of error.
Rules differ. Under some schemes a part-year beyond six months is rounded up to a full year, while others count only completed years. This calculator multiplies by the whole number of years you enter, so adjust the input if your local rule rounds differently.
No. Many systems cap the maximum gratuity payable and may exempt only up to a limit for tax. This tool shows the raw formula result, so a very long tenure or high salary could produce a figure above the cap that actually applies to you.
No. The 15/26 approach is common, but the qualifying period, the salary definition, caps, rounding, and tax treatment all vary by country and employer. Treat the result as a general estimate and confirm the rules that apply to your employment.
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Finance disclaimer
Results are estimates based on the figures you enter and standard formulas. Rates, fees, taxes, and lender terms vary and change over time, so confirm important numbers with your lender or a qualified professional. This is educational information, not financial advice.
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