Gratuity Calculator

Our gratuity calculator helps you estimate the lump sum amount you may receive from your employer based on your last drawn salary (Basic + DA) and years of service. As per the standard formula: ...Read More

Monthly Salary

₹
10K10L
60K

Year of Service

Years
5Y50Y
20Y
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Estimated Gratuity Amount

₹ 6,92,308

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How to Use Our Online Gratuity Calculator?

The Axis Max Life Gratuity Calculator estimates the gratuity benefit based on the information entered by the user. The calculator is meant to make the process of calculating gratuity simpler by minimising the need for manual calculation. You can use the calculator to estimate your potential gratuity benefit when planning for resignation, retirement or another situation in which gratuity may become payable.

For a more accurate estimate, enter the required salary and service details correctly. Keep your relevant salary and employment details available before starting the calculation. After providing the necessary data, the calculator computes and displays the estimated gratuity.

Step What You Need to Do
1. Open the calculator. Access the Axis Max Life online gratuity calculator and examine the fields shown on the screen.
2. Enter your salary details. Enter the information about your salary as required by the calculator. Enter only the relevant salary and not the total cost to the company (CTC) unless specified by the calculator.
3. Enter your service period. Enter the period of service as mentioned by the calculator, including any additional months or service details if applicable.
4. Select the relevant option. Select the employment or coverage option applicable to your situation, if the calculator provides one.
5. Check your inputs. Check if you have entered the correct information about the salary and the period of service.
6. Calculate gratuity. Press the submit button or choose the option to calculate as suggested by the calculator.
7. View the estimate. The calculator will show the estimated gratuity payable as per the details entered.
8. Use the result for planning. Use the estimated amount as a guide for financial planning.

The calculator provides an estimate based on the information entered, so incorrect salary or service details may affect the result. The actual gratuity payable may differ based on the employee's eligibility, applicable rules, employment records and the employer's final calculation. Therefore, use the result as an estimate for financial planning rather than as a confirmation of the final gratuity amount.

How Does the Gratuity Calculator Work? (The Formula)

The gratuity calculator estimates the gratuity payable based on the salary and service details entered by the user. The applicable gratuity calculation depends on the employee's employment category and the law governing the gratuity, including the Code on Social Security, 2020, where applicable.

Calculation for Employees Covered Under the Act

The gratuity provisions apply to eligible employees covered by the applicable labour law and establishment requirements. This can also include establishments with 10 or more employees employed during any day in the previous 12 months. Once such an establishment is covered, it continues to be covered even though its employee strength later falls below 10. For employees who come under the Payment of Gratuity Act, the widely used gratuity calculation formula for monthly-rated employees is as follows:

Gratuity = (Last Drawn Salary × 15 × Years of Completed Service) ÷ 26


Generally, the gratuity calculation includes the following factors to be considered:

  • Last drawn salary: This refers to the salary of the employee taken into account while calculating the gratuity. This does not necessarily mean that it will be the total CTC of the employee.
  • 15 days’ wages: The formula calculates the gratuity based on 15 days of wages for every year of qualifying service of the employee.
  • 26 days: For a monthly-rated employee covered by the applicable statutory formula, 15 days' wages are calculated by dividing the last-drawn monthly wage by 26 and multiplying it by 15.
  • Years of service: The calculator applies the applicable rules to determine the number of years of service, including any eligible part of a year.
  • Service period: The additional period after completing the qualifying years of service is calculated depending on the applicable gratuity rules.
  • Estimated result: After applying the relevant inputs, the calculator displays the estimated gratuity amount.

Calculation for Employees Not Covered Under the Act

If employees work in organisations not covered under the Payment of Gratuity Act, 1972, they might not be eligible for gratuity as per the terms of the Act. Individuals who are not employees within the scope of the applicable gratuity provisions may not be entitled to statutory gratuity.

  • Small organisations: Employees working in an establishment with fewer than 10 employees and where the employer has not adopted the Act voluntarily.
  • Freelancers: Freelance workers and independent contractors do not come under the scope of this Act, as they are not employees.
  • Domestic workers: Domestic workers engaged directly by individual households generally fall outside the statutory gratuity framework applicable to covered establishments.
  • Probationary employees: Being on probation does not by itself determine gratuity eligibility; the employee's status, qualifying service and applicable gratuity provisions must be considered.

Where an employer provides gratuity under a contractual or voluntary arrangement outside the statutory formula, the calculation method will depend on the applicable employment terms or policy and may differ from the statutory 15/26 formula.

Employees outside the statutory gratuity framework may still receive gratuity if it is provided under an employment contract, company policy, award or other applicable arrangement. In such cases, the calculation method may differ from the statutory formula, so employees should refer to their employment terms before using a statutory gratuity calculator.

Understanding Your Calculation: Do You Meet the 5-Year Eligibility Rule?

A service period of five years is one of the important factors that should be taken into account while assessing the eligibility for payment of gratuity. For many employees, five years of continuous service is required for gratuity on resignation, retirement or termination, subject to statutory exceptions and the specific employment category. It can usually be obtained upon resignation, retirement, or termination of employment. In case of additional months of service along with years of service, the applicable rules of the gratuity would help decide its calculation.

However, the criterion of five years of service is not applicable in situations such as death or disablement, where gratuity is paid even without serving for five years. Thus, the service period needs to be taken into consideration based on the circumstances of employment termination. The following factors are taken into account while considering the eligibility of the gratuity estimate based on the duration of the service period.

Situation Eligibility Consideration
Resignation after continuous service Eligibility of an employee for gratuity is usually based on completion of five years or more of continuous service from the initial date of employment.
Retirement or superannuation In case an employee leaves work after fulfilling the applicable minimum service period, the employee would be entitled to gratuity on the fulfilment of the concerned criteria.
Termination of employment Eligibility depends on the applicable gratuity provisions and the employee's qualifying service period.
Death of the employee
  • The usual five-year condition does not apply when there has been death as per the Payment of Gratuity Act.
  • The gratuity amount would become payable irrespective of whether the minimum five-year period is fulfilled.
Disablement due to accident or illness The minimum period of service is not usually applicable where there is disablement.
Fixed-Term Employees (FTEs)
  • Under the current Social Security Code framework, a fixed-term employee is eligible for gratuity if the employee renders service under the contract for one year from the start of the contract, subject to the applicable provisions.
  • The minimum requirement of five years of service is not necessary in order to be eligible for gratuity upon the expiration of the fixed-term employment agreement.
  • The gratuity for fixed-term employees is paid on a pro-rata basis, subject to the applicable provisions.
Continuous service
  • Eligibility for gratuity depends on the employee's qualifying period of continuous service and not just the total period of service reflected in the employment record.
  • There could be certain absences or interruptions that might be considered according to the applicable rules.
Contract labour For contract labour, the contractor is responsible for paying gratuity where the statutory conditions are met, as clarified by the Ministry of Labour and Employment.
Incomplete service period An employee who does not meet the relevant eligibility criteria cannot claim gratuity, except where statutory exceptions apply.

Although five years of continuous service is generally an important eligibility condition, the applicable exceptions and employment category must also be considered. Various factors such as the reason for termination of employment, the nature of service, applicable statutory provisions, and other relevant conditions can affect eligibility. Reviewing these factors along with the estimate generated by the calculator can help employees better understand their potential gratuity benefit.

Is the Gratuity Amount Shown Tax-Free? (2026 Exemption Limits)

For employees covered by the relevant provisions, the gratuity exemption is subject to the applicable conditions and limits under Section 10(10) of the Income-tax Act. For the relevant categories reflected in the current ITR rules, the limit is ₹20 lakh for specified non-Central/State Government categories and ₹25 lakh for Central and State Government categories.

Employee Category General Tax Treatment What to Consider
Employees covered under the Payment of Gratuity Act Gratuity may qualify for exemption under Section 10(10), subject to the applicable conditions and statutory limits. The gratuity amount, statutory gratuity formula, and tax exemption rules have to be considered.
Employees not covered under the Act Exemptions will depend on income-tax provisions that apply. The exemption calculation and overall exemption limit may apply.
Government employees Income received as gratuity by employees of the government, excluding statutory corporation employees, is completely exempt from tax under Section 10(10)(i) of the Income-tax Act, 1961. It is subject to the relevant rules of the government service concerning eligibility for gratuity. The service regulations and income-tax provisions need consideration.
Amount exceeding the exemption limit The excess can be taxable. The taxable amount needs determination based on income-tax provisions.

For those employees who fall within the Payment of Gratuity Act, tax exemption applies subject to the statutory requirements and the tax-exemption limit provided. Employees who are not covered under the Payment of Gratuity Act are exempt from tax based on the relevant income tax provisions and the tax exemption limit. Amounts above the tax-exempted amount could attract tax depending on the conditions of the employee. While analysing the results of the online gratuity calculator, employees must make the distinction between the gratuity amount calculated and the tax-exempted amount.

Fixed-Term Contract Employees vs. Permanent Staff

Gratuity eligibility and income-tax exemption are separate questions, so a fixed-term employee should assess both independently.

Factor Fixed-Term Employee Permanent Employee
Nature of employment Employment is restricted to a particular time period under the fixed-term contract. Employment is generally indefinite in nature but conditional on some terms of employment.
Gratuity eligibility Eligibility for gratuity benefits will arise after one year of continuous employment under the fixed-term contract as per the relevant provisions. Five years qualifying period for gratuity is applicable in circumstances such as resignation, retirement, or termination, subject to statutory exclusions.
Death or disablement Specific statutory provisions apply. The five-year requirement will not be applicable in case of death or disablement.
Calculation The gratuity will be calculated on a pro-rata basis if the relevant fixed-term provisions apply. The applicable gratuity calculation is generally based on the qualifying service period and wage.
Tax treatment The eligibility for gratuity does not necessarily mean that it will be exempt from income tax. The income-tax provisions will apply separately under the applicable income-tax provisions.

It is also important to understand that eligibility does not necessarily mean tax exemption. A contract employee might be eligible to get a gratuity according to labour laws, but the taxation of this particular gratuity should be considered separately according to the income tax laws. As such, even if the service requirement has been fulfilled, that does not automatically imply that the entire amount of gratuity is tax-exempt.

Thus, a gratuity calculator should be applied to only determine the possible gratuity benefit. Tax considerations will have to be considered separately in order to determine how much of the total gratuity amount they may actually receive after any tax liability.

Detailed Examples of Gratuity Calculation (Scenario-Based)

Real-life scenarios make the use of the gratuity formula easy to understand. The total gratuity depends on the last eligible salary of the employee, qualifying service, nature of employment, and termination of the employment. The following are some examples of the benefit calculation in various situations.

Scenario 1: Resignation After 7 Years of Service

Assume that there is an employee who resigns after having completed seven years of qualifying service with an eligible salary of ₹50,000 per month at the time of such resignation.

  • Last drawn salary: The salary of ₹50,000 is taken into consideration in this particular case for calculations.
  • Number of days' wages: The formula uses 15 days’ wages annually for each year of the qualifying period.
  • Years of service: The period of qualifying service in this case is 7 years.
  • Divisor: The number 26 is a part of the commonly used formula that applies to the employees covered by the Act.
  • Formula: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26.
  • Calculation: (₹50,000 × 15 × 7) ÷ 26.
  • Estimated gratuity: The gratuity amount estimated in this case is ₹201,923.
  • Eligibility: The employee is eligible for gratuity since the qualifying period is more than five years in case of resignation, subject to the applicable conditions.

This example shows how eligible salary and qualifying service affect the gratuity estimate.

Scenario 2: Calculation Upon Superannuation (Retirement)

Consider an employee who has retired on superannuation with 20 years of qualifying service, and the last drawn eligible salary was ₹80,000 per month.

  • Last drawn salary: The last drawn salary of the employee is considered ₹80,000 for the calculation of gratuity.
  • Number of days' wages: Wages of 15 days are taken into consideration per year of qualifying service of the employee.
  • Years of service: 20 years of qualifying service of the employee.
  • Divisor: Assume 26 as the divisor for calculating the gratuity of the employee.
  • Formula: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26.
  • Calculation: (₹80,000 × 15 × 20) ÷ 26.
  • Estimation of Gratuity: The result amounts to be around ₹923,077.
  • Effect of longer service: With the increase in the qualifying service of the employee, the amount of gratuity also increases, while all the other factors remain the same for the sake of the example.

This example illustrates the impact of a longer period of qualifying service in the determination of the gratuity benefit.

Scenario 3: Gratuity Eligibility in the Event of Death or Disablement

The eligibility for gratuity could also be considered in cases where the termination of employment takes place because of the death or disablement of the individual. In this case, the five-year criteria generally does not apply under the gratuity regulations. For example, let us assume that an employee has served for three years and his last drawn salary is ₹40,000.

  • Last drawn salary: 40,000 is the last drawn salary considered for the calculation of gratuity in this case.
  • Years of service: 3 Years of qualifying service have been completed by the employee.
  • Reason for cessation: The cessation of employment is due to the death or disablement of the employee.
  • Five years' requirement: The requirement of 5 years of qualifying period does not apply in case of death or disablement of the employee.
  • Eligibility: The amount of gratuity will be payable even without working for 5 years of the qualifying period.
  • Calculation: The amount will be calculated based on the applicable gratuity rules.
  • In case of death: Usually, the gratuity amount is paid to the nominee or legal heir of the deceased, as applicable.
  • In case of disablement: The determination of the gratuity amount is done according to the applicable statutory rules.

The above example shows how the duration of service will influence the compensation claim in case the termination of employment arises from death or disablement of the employee.

This example illustrates the difference in the calculation of gratuity in relation to salary, length of service, and reason for leaving employment. A gratuity calculator can indicate the estimated benefit. However, the actual amount will depend on the statutory requirements and the actual service record of the employee.

How Leaves and Absences Affect Continuous Service for Gratuity

The period in which the employee is eligible for gratuity is calculated on the basis of continuous service rather than just the difference in the number of calendar years from the date of employment to the date of departure of the employee. In certain circumstances, the absences might also be counted as continuous service, while in others, unauthorised absences can be treated as a break in service. Hence, the nature and length of leave or absence must be considered when calculating gratuity.

Are Gig Workers, Freelancers, or Consultants Eligible?

The eligibility to claim the gratuity depends on whether the individual qualifies as an employee as per the applicable rules. Freelancers, gig workers, and independent consultants work on terms and conditions that are different from those of an ordinary employee. Thus, such individuals cannot assume that providing their services to an organisation makes them eligible for statutory gratuity.

  • Gig or platform workers: Gig and platform workers are recognised separately under the Social Security Code, but this does not by itself make them eligible for the employee gratuity benefit under Section 53.
  • Freelancers & consultants: Freelancers and independent consultants generally do not qualify for statutory gratuity merely because they provide services to an organisation; eligibility depends on whether an employer-employee relationship exists under the applicable law.
  • Importance of Employment Status: The relationship of work, employment contract, and labour laws has to be understood before determining the eligibility for gratuity.

This difference exists since gratuity is a legal benefit offered to those who qualify as employees. Thus, providing only services to an organisation will not make an individual an employee of the organisation and provide the eligibility to receive gratuity.

Private Sector vs. Government Sector Gratuity and Tax Rules

Gratuity eligibility and tax treatment may differ depending on the employee's sector, employment category and the rules governing the gratuity. Employees are advised to determine which rules apply to them based on their employment classification instead of considering that everyone is eligible for the tax exemptions.

  • Employees in the private sector: The employees who come under the scope of the relevant gratuity laws are covered by the statutory laws dealing with eligibility, computation, payment, and tax on gratuity.
  • Central Government employees: Certain employees of the Central Government are governed by different service and pension regulations, such as the CCS (Pension) Regulations, 2021. Under these regulations, gratuity, as well as death gratuity, can be provided based on qualifying service and circumstances.
  • All India Services: Officials under the corresponding All India Services regulations may also have their separate provisions for death-cum-retirement gratuity and other retirement benefits.
  • State Government employees: State Government employees will be governed by the corresponding pension, service, and gratuity regulations of the State Government. In this case, the provisions will be different from those applying to private sector employees.
  • Employees under separate gratuity regulations: The Code on Social Security, 2020, recognises the existence of some employees whose gratuity is governed by another law or by the regulations concerning gratuity.
  • Public Sector Undertaking (PSU) and Government-owned organisations: PSU and government-owned organisations may have gratuity provisions governed by the applicable labour laws and their employment rules; they should not automatically be treated the same as government employees.
  • Tax exemption is separate: Eligibility for the tax exemption of the gratuity differs from the eligibility of the employee in receiving the gratuity.
  • Relevant rules: The sector of the employee, type of employment, service rules governing, and the type of gratuity received are the factors to be considered while determining the tax assessment.
  • Calculator result: A gratuity calculator only estimates the amount of benefit to be received and cannot be considered as a tax assessment.

Therefore, employees should determine their gratuity eligibility and tax treatment based on the rules applicable to their employment category.

Does Maternity Leave Count Toward Continuous Service?

Eligible maternity leave can count towards continuous service for gratuity, subject to the applicable statutory conditions. The appropriate statutory provisions will determine the status of the eligible maternity leave, and it will not necessarily affect continuous service. Employees need to take into account the rules on maternity leave in calculating the service period for gratuity.

  • Inclusion of maternity leave is permissible: The provisions of continuous service rules specifically include maternity leave in the calculation of eligible continuous service if the prescribed maximum limit is not exceeded.
  • Maximum limit: Eligible maternity leave is included when determining continuous service, subject to the applicable statutory limit and conditions.
  • Impact on continuity of service: A qualifying period of maternity leave alone cannot constitute an interruption in an employee’s service for purposes of gratuity.
  • Leave other than maternity leave: The classification of other leave would depend on whether or not such leave fits into the relevant rules for determining continuous service.
  • Unauthorised absence: Unauthorised absence does not automatically break continuous service; whether it interrupts service depends on the applicable standing orders, rules or regulations.

Thus, an employee cannot assume that maternity leave automatically needs to be deducted from the service period while making use of a gratuity calculator.

Is the Notice Period Included in the 5-Year Tenure?

Treatment of the notice period is based on whether there is continued employment during the notice period and the actual date of employment termination. If the notice period is validly served, it could be counted in the continuous service of the employee. If an employee is released early or takes a notice buyout, they should consider the actual date of employment termination and applicable employment terms.

  • Notice period served: If the employee serves the notice period as per the contract, then the employment will continue until the date stated on the last working day. Therefore, the period can become a part of the continuous service of the employee.
  • Last working day: In relation to determination of the eligibility period, the relevant service period usually ends on the date on which employment ceases.
  • Release before the end of notice period: When the employee is terminated prior to serving the notice period, the period after the date of actual termination of the employment may not be considered as service due to the payment of notice pay.
  • Buy-out of notice period: In cases where the employee is released early through notice-period buy-out, the unserved notice period may be handled differently depending on the terms of employment.
  • Employees nearing 5 years: This difference becomes relevant when the employee approaches the required minimum qualifying service period. In this case, the actual termination date and service period need to be verified.
  • Calculator input: Where the notice period is served as part of continued employment, the service period should generally run through the actual termination date; where the employee is released earlier, the applicable employment terms and actual termination date should be considered.


All these aspects must be taken into account along with the result provided by the gratuity calculator to obtain a more accurate understanding of the potential gratuity benefit.

Where and How to Declare Gratuity in Your ITR (Income Tax Return)

When filing an ITR, employees should distinguish between the total gratuity received, the amount eligible for exemption and any taxable portion. The below-mentioned table helps to understand the process in a simple manner:

Step What the Employee Should Do What to Check / Report
1. Check the gratuity received. Confirm the payment of the gratuity amount actually paid by the employer for the financial year. Check the settlement slip, gratuity payment, bank statement, or Form 16.
2. Identify the exempt amount. Determine the gratuity amount that can be exempted from tax. The exemption will be based on the type of employee and the applicable income tax law.
3. Calculate the taxable portion. In case the gratuity amount exceeds the exemption amount, identify the taxable amount. Report the taxable portion under the applicable salary-income fields in the relevant ITR form.
4. Check Form 16. Compare the details of the gratuity amount as disclosed by the employer. Verify the employer’s form to confirm whether the exempted and taxable amounts have been stated separately, where applicable.
5. Report the taxable amount. Enter the taxable amount in the respective salary income section while filing the ITR form. The specific section may vary depending upon the ITR form and method of filing taxes.
6. Keep supporting documents. All documentation related to the calculation of gratuity and tax should be maintained. Form 16, gratuity calculation, proof of payment, and other employment documents should be retained.
7. Compare with the calculator result. The online gratuity calculator can be used only for estimation purposes. The ITR will have to be filed based on the actual gratuity amount received and relevant tax provisions, rather than only the calculator's estimate.

herefore, the entire gratuity amount should not be assumed to be either fully taxable or fully exempt. The correct procedure is to first identify the amount of the gratuity income, determine the exemption amount, and then cross-verify the amount mentioned in the Employer’s Form 16 for reporting purposes.

Frequently Asked Questions (FAQs) About Gratuity Calculation

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