Gratuity Calculator: 15/26 Formula and ₹20 Lakh Tax-Free Limit
Enter your last monthly basic + DA and your years of service. You get the gratuity amount and the part that is tax-free.
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Gratuity
₹3,46,154
Eligible- Years counted
- 10 years
- Tax-free
- ₹3,46,154
- Taxable
- ₹0
FY 2026-27 rules, estimate. Not tax advice: check with a CA before you file or invest.
Part-year over 6 months counts as a full year (covered employers only).
Show working
- 15 ÷ 26 × ₹60,000 × 10 = ₹3,46,154
How to use
- Enter your last drawn monthly basic + DA.
- Enter your years and extra months of continuous service.
- Pick whether your employer is covered by the gratuity law and whether you work in government or private.
Good to know
Covered employers (10 or more employees) pay 15 days' wages for every completed year: gratuity = 15 ÷ 26 × last monthly basic + DA × years. A part-year of more than six months counts as a full year, so 10 years 7 months counts as 11. If your employer is not covered, the usual formula is 15 ÷ 30 × average basic + DA of the last 10 months × completed years.
You normally need five years of continuous service (not needed on death or disablement). The Code on Social Security, 2020, in force from 21 November 2025, lets fixed-term employees get gratuity after one year; turn on the fixed-term option for that. Under the codes, "wages" usually must be at least 50% of total pay, which can raise gratuity.
Tax: government employees' gratuity is fully tax-free. For others the tax-free amount is the lowest of the gratuity received, the formula amount and ₹20 lakh, a lifetime limit across all employers. We checked this limit on 27 Oct 2026 in secondary sources; the 2024 increase to ₹25 lakh applies to central government gratuity rules, not to this private-sector exemption. This page is waiting for a CA review.
Questions
How is gratuity calculated?
Gratuity = 15 × last monthly basic + DA × years of service ÷ 26. For ₹60,000 and 10 years that is about ₹3,46,154.
Is 4 years 8 months enough for gratuity?
The law asks for five years of continuous service. Some courts have counted 4 years and 240 days as five years, but that is not certain; ask your HR or a lawyer. Fixed-term employees need one year under the new codes.
How much gratuity is tax-free?
For private-sector employees, up to ₹20 lakh in your whole working life. Government employees pay no tax on gratuity.
Is there a maximum gratuity?
For covered employers the statutory ceiling is also ₹20 lakh, but an employer can pay more under its own scheme. Anything above the tax-free limit is taxed as salary.
Does it include DA and commission?
Use basic + dearness allowance. Commission counts only for non-covered employees when it is a fixed percentage of turnover.