Job switch after 5+ years
Use your last drawn Basic + DA and completed tenure to estimate exit payout before accepting a new offer.
Gratuity Calculator (Years + 4 Years 240 Days Rule)
Estimate gratuity for private employees in India using years and months. Includes Payment of Gratuity Act formula and common 4 years 240 days eligibility context.
How to use this calculator
- 1
Enter last drawn salary
Enter your last drawn monthly salary including Basic Pay and Dearness Allowance (DA).
- 2
Enter years of service
Enter the total number of completed years of continuous service with your employer.
- 3
View gratuity amount
The calculator applies the formula (Salary × 15/26) × Years and shows your estimated gratuity. Check if it exceeds the ₹20 lakh tax-exempt cap.
₹
yrs
Total gratuity payable
Gratuity payable₹ 2,88,462
Formula: (Last salary × 15 ÷ 26) × Years. More than 6 months in a year = one full year. Tax-exempt limit is ₹20 lakh in your lifetime.
Quick answer
Quick estimate: gratuity is usually around 0.577 x (last drawn Basic + DA) x completed years of service. For many users, the key check is eligibility around 4 years 240 days and years/month rounding.
Gratuity is a lump-sum payment an employer makes to an employee as a token of appreciation for services rendered. It is governed by the Payment of Gratuity Act, 1972 and applies to employees who have completed at least 5 years of continuous service.
What is this calculator?
A Gratuity Calculator helps you estimate the gratuity amount you will receive when you leave a job after 5+ years. You enter your last drawn salary (Basic + DA) and years of service; the calculator instantly shows the gratuity payable.
Formula
Gratuity = (Last drawn salary × 15) ÷ 26 × Number of completed years of service. Here, 15 represents the number of days' wages payable, and 26 is the number of working days in a month. 'Last drawn salary' means Basic salary + Dearness Allowance (DA). For employees NOT covered under the Gratuity Act: Gratuity = (15 × Last drawn salary × Tenure) ÷ 30
Example
Suppose you worked for 15 years and your last drawn salary (Basic + DA) was ₹30,000 per month:
Gratuity = (30,000 × 15 ÷ 26) × 15 = ₹2,59,615.
The maximum tax-exempt gratuity is ₹20 lakh under current rules. Any amount above this is treated as ex-gratia and is taxable as per your income-tax slab. If the tenure in the final year exceeds 6 months, it is rounded up to one full year.
Scenario snapshots
Retirement corpus planning
Model gratuity and then compare deployment into PPF, NPS, or FD depending on goal horizon.
Decision guide
Choose this when
- ✓You have completed at least 5 years of continuous service and want a quick gratuity estimate.
- ✓You are evaluating job offers and want to include expected gratuity payout in negotiation.
- ✓You need a rough tax planning base before calculating final exemption and taxable balance.
Pick another route when
- •You need an exact HR settlement number including company-specific ex-gratia rules.
- •Your tenure/disability/death eligibility case requires legal interpretation.
- •You are estimating take-home tax impact without considering other salary components.
Common mistakes to avoid
- !Entering gross CTC instead of Basic + DA in the formula.
- !Ignoring service-year rounding rules used by the employer.
- !Assuming every amount above exemption remains fully tax-free.
Assumptions and disclaimers
Updated context: FY 2026
- •Standard Payment of Gratuity Act method is applied for covered establishments.
- •Eligibility and completion-year logic are simplified for estimation.
- •Tax treatment can vary with employment type and latest notified limits.
In practice (India)
Many employees search for gratuity calculator 4 years 240 days India, gratuity eligibility calculator, and gratuity calculator for private employee cases before job changes. This tool helps you model years and months quickly using last drawn Basic + DA and the standard Act formula.
After estimating gratuity, compare where to allocate the payout using PPF, EPF/VPF continuation, NPS, or even a conservative FD bucket for near-term needs. You can also compare post-tax outcomes with our income tax and HRA calculators if you are restructuring salary at a new employer.
Benefits
- ✓Instantly know how much gratuity you are eligible for before switching jobs or retiring.
- ✓Plan your post-employment finances. Invest the gratuity wisely in FD, PPF, NPS or mutual funds.
- ✓Understand the ₹20 lakh statutory cap and plan taxes accordingly.
- ✓Compare different salary or tenure scenarios to see how gratuity grows.
Related calculators and guides
Frequently Asked Questions
- Is 4.5 years of service eligible for gratuity?
- Generally, no. You need at least 5 years of continuous service. However, a Madras High Court ruling states that 4 years and 240 days may qualify. In case of death or disability, the 5-year rule is waived.
- Is there an upper limit on the gratuity amount?
- Yes. Under the Payment of Gratuity Act, the maximum gratuity payable is ₹20 lakh. Anything beyond that is considered ex-gratia by the employer.
- What does 15/26 mean in the gratuity formula?
- 26 represents the projected working days in a month. The gratuity is calculated at the rate of 15 days' wages for each completed year, so per-day wage is salary ÷ 26, and half-month wage is that × 15.
- Is gratuity taxable?
- Government employees receive fully tax-exempt gratuity. For private employees, the least of the following is exempt: actual gratuity received, ₹20 lakh, or the eligible gratuity as per the formula. The balance is taxable as per your slab.
- Do contract employees get gratuity?
- If a contract employee is on the company's rolls, they are eligible. If employed through an external contractor, the contractor is responsible for paying the gratuity.
This calculator uses the standard formula under the Payment of Gratuity Act, 1972. Actual gratuity may differ based on employer policies, CTC structure, and applicable court rulings.