Gratuity Rules (2026)
- •Eligibility: minimum 5 years of continuous service with the same employer.
- •Formula: (15 × last salary × years) ÷ 26, where salary = basic + DA.
- •Tax-free up to ₹20 lakh for non-government employees.
- •Payable on resignation, retirement, or termination after the eligibility period.
The Real Problem This Solves
Most employees have no idea their company legally owes them money the moment they cross 5 years, and many employers count on that ignorance.
Gratuity is your right, not a bonus. This calculator shows exactly how much you've earned.
How Your Gratuity Is Calculated
The formula is (15 × last drawn monthly salary × years of service) ÷ 26. The "26" represents working days in a month; "15" is 15 days' wages for each completed year.
Example: Priya resigns after 10 years with a last drawn basic+DA of ₹50,000. Her gratuity = (15 × 50,000 × 10) ÷ 26 = ₹2,88,462, completely tax-free since it's under ₹20 lakh.
| Last Salary (Basic+DA) | Years of Service | Gratuity |
|---|---|---|
| ₹50,000 | 10 years | ₹2,88,462 |
| ₹50,000 | 5 years | ₹1,44,231 |
| ₹80,000 | 15 years | ₹6,92,308 |
Frequently Asked Questions
What is the minimum service for gratuity?
You generally need at least 5 years of continuous service with the same employer. There are limited exceptions for death or disability.
Is gratuity taxable?
For non-government employees covered by the Act, gratuity up to ₹20 lakh is tax-free. Anything above that is added to your income and taxed.
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