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Gratuity is a lump-sum retirement benefit paid to an employee in recognition of long, continuous service. Under the 8th Pay Commission, gratuity amounts are set to rise significantly because the calculation is based directly on your revised (higher) basic pay and Dearness Allowance. Use this calculator to estimate your gratuity using your 8th CPC basic salary.
Gratuity Calculator (Government & Gratuity Act)
Formula used:
Note:
⚠️ Important Note on Accuracy
This calculator produces an estimate based on publicly discussed 8th Pay Commission fitment logic and historical Pay Commission patterns. It is not an official government tool. Always cross-check your final figures with your Pay & Accounts Office (PAO), DDO, or HR department once the official 8th CPC notification is published. For authoritative information, refer to dopt.gov.in.
The Gratuity Formula Explained
📝 Correction (25 September 2026)
An earlier version of this page used the formula (Basic + DA) × years ÷ 26, which understated gratuity heavily. The correct formulas are below, and the calculator now uses them.
Central Government employees (CCS rules)
Retirement Gratuity = ¼ × (Basic Pay + DA) × number of completed six-monthly periods of qualifying service, subject to a maximum of 16.5 × (Basic + DA) and an overall ceiling of ₹25 lakh (raised from ₹20 lakh with effect from 1 January 2024, when DA reached 50%).
So each completed year of service earns half a month of (Basic + DA), and 33 years earns the maximum 16.5 months. Many State Governments follow the same formula with their own ceilings.
PSU and private employees (Payment of Gratuity Act, 1972)
Gratuity = (Basic + DA) × 15 ÷ 26 × completed years of service (a part-year of more than 6 months counts as a full year), with a ceiling of ₹20 lakh.
Worked Example (Government)
An employee retires with Basic Pay ₹78,800 and DA at 60% (₹47,280) after 30 years of service. Emoluments = ₹1,26,080. Six-monthly periods = 60. Gratuity = ¼ × ₹1,26,080 × 60 = ₹18,91,200, which is within both the 16.5-month limit (₹20,80,320) and the ₹25 lakh ceiling.
Under the 8th CPC, the same service with a higher revised basic would produce a larger gratuity, but the ₹25 lakh ceiling may cap it unless the ceiling is also revised, as has happened with every past pay commission.
Eligibility & Tax Rules
- Minimum service required: 5 years of continuous service (waived in case of death or disability while in service).
- Components included: Basic Pay and Dearness Allowance only — HRA, Transport Allowance, and other allowances are excluded from the calculation.
- Maximum gratuity ceiling: ₹25 lakh for Central Government employees from 1 January 2024; ₹20 lakh under the Payment of Gratuity Act. The ceiling has been raised with every pay commission and may rise again under the 8th CPC.
- Tax treatment: Gratuity received by Central/State Government employees is fully exempt under Section 10(10)(i) of the Income Tax Act. For other employees, the exemption is limited to ₹20 lakh.
- Payment timeline: Gratuity is typically required to be settled within 30 days of the employee's retirement, resignation, or death.
Gratuity by Years of Service (Quick Reference, Government)
Months of (Basic + DA), and the amount for an employee with Basic + DA of ₹1,26,080 (Level 12 entry pay with 60% DA).
| Completed Service | Gratuity as Months of (Basic + DA) | Example Amount |
|---|---|---|
| 5 years | 2.5 months | ₹3,15,200 |
| 10 years | 5 months | ₹6,30,400 |
| 15 years | 7.5 months | ₹9,45,600 |
| 20 years | 10 months | ₹12,60,800 |
| 25 years | 12.5 months | ₹15,76,000 |
| 30 years | 15 months | ₹18,91,200 |
| 33 years | 16.5 months | ₹20,80,320 |