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Gratuity Calculator
Gratuity is last drawn monthly basic + DA × 15 ÷ 26 × completed years of service, normally payable after 5 years of continuous service and capped at ₹20,00,000.
Work out the gratuity payable to an employee who leaves after completing the minimum period of service. Enter the last drawn monthly basic (plus dearness allowance) and the length of service.
What you enter
- Last drawn monthly basic + DA
- Years of service
- Extra months of service
- Minimum service for gratuity (years)
- Maximum gratuity
How the Gratuity Calculator works
- Gratuity = last drawn monthly basic + DA × 15 ÷ 26 × completed years of service.
- A part of a year of more than 6 months is counted as a full year; 6 months or less is ignored.
- The amount is limited to the maximum gratuity you enter (₹20,00,000 is the figure commonly applied).
Worked example: Basic + DA of ₹50,000, service of 7 years 8 months
- Extra months (8) are more than 6, so completed years counted = 7 + 1 = 8.
- Gratuity = 50,000 × 15 ÷ 26 × 8 = ₹2,30,769.
- The amount is below the ₹20,00,000 maximum, and service is above 5 years, so ₹2,30,769 is payable.
| Service completed | Years counted |
|---|---|
| 7 years and up to 6 months | 7 |
| 7 years and more than 6 months | 8 |
| 5 years exactly | 5 |
Assumptions to keep in mind
- The 26 in the divisor is the number of working days in a month used by the formula for employees paid monthly.
- Gratuity normally needs 5 years of continuous service; it is payable earlier on death or disability. Check your own policy and the latest rules.
Figures last reviewed November 2026. Rates and limits change, so check the official sources below.
Frequently asked questions
How is gratuity calculated?
Multiply the last drawn monthly basic + DA by 15, divide by 26, and multiply by the completed years of service. A part of a year above 6 months counts as a full year.
How many years of service are needed for gratuity?
Usually 5 years of continuous service, with exceptions such as death or disability. The Labour Codes also changed the rule for fixed-term employees, so check the current rule for your case.
Is there a maximum amount of gratuity?
The figure commonly applied is ₹20,00,000. This calculator lets you change it if the limit is revised.
Why is 26 used in the formula?
The formula treats a month as 26 working days for employees paid monthly, so 15 days of wages is 15 ÷ 26 of a month’s wage.
Sources
Let Lumos HRMS do this for every employee
Lumos HRMS calculates attendance-based pay with PF, ESI and other statutory deductions for the whole team. See payroll
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