The calculation
- 15 days’ wages: ₹50,000 × 15 ÷ 26 = ₹28,846.
- × 10 years: ₹2,88,462.
- Tax: exempt, because it is below both the formula limit and ₹20 lakh.
The 6-month rule can add a year
If you have served 10 years and 7 months, the extra part-year is more than six months, so it counts as a full year: 11 years and ₹3,17,308. With exactly 10 years and 6 months, it stays at 10 years. If you are close to the line, it can be worth timing your last working day — a little patience can add ₹28,846.
Same salary, longer service
| Service | Gratuity on ₹50,000 | Months of basic + DA |
|---|---|---|
| 5 years | ₹1,44,231 | 2.9 |
| 7 years | ₹2,01,923 | 4.0 |
| 10 years | ₹2,88,462 | 5.8 |
| 12 years | ₹3,46,154 | 6.9 |
| 15 years | ₹4,32,692 | 8.7 |
| 20 years | ₹5,76,923 | 11.5 |
| 25 years | ₹7,21,154 | 14.4 |
| 30 years | ₹8,65,385 | 17.3 |
Each year of service adds about 0.58 months of basic + DA. Notice that even 30 years on ₹50,000 stays under the ₹20 lakh cap.
When the ₹20 lakh cap kicks in
The maximum gratuity under the law is ₹20,00,000, and it is also the lifetime tax-free limit for non-government employees across all employers. With 10 years of service you would reach it at about ₹3,46,667 of basic + DA. Above that, the law caps your gratuity at ₹20 lakh, although an employer can choose to pay more under its own scheme (the extra is taxable as salary).
A quick check on your own numbers
Open your latest payslip and add basic pay and DA (many private employers have no DA, so it may just be basic). Count your full years with the employer from your joining date, and look at the leftover months. Enter those into the calculator above: it applies the rounding, the ₹20 lakh ceiling and the tax-free limit for you.
Which salary is used?
Your last drawn basic + DA, not an average. A raise in your final year therefore increases gratuity for all your years of service. Allowances like HRA and special allowance are not included, unless together they are more than half of your total pay — the Labour Code’s 50% rule (see our guide on that).
Many employers fund gratuity through an LIC or insurer group gratuity scheme. That does not change how much you get; it only changes who pays it out.
FAQ
How much gratuity for 10 years with ₹50,000 basic + DA?
15/26 × ₹50,000 × 10 = ₹2,88,462, fully tax-free.
Does 10 years and 7 months count as 11 years?
Yes. A part-year of more than six months is rounded up, so the gratuity becomes ₹3,17,308 on ₹50,000 basic + DA.
What is the maximum gratuity in 2026?
₹20 lakh under the Code on Social Security, which is also the lifetime tax-free limit for private-sector employees. Government employees’ gratuity follows their own rules and is fully exempt.
Sources (checked 5 Nov 2026): Code on Social Security, 2020, ss. 2(88) and 53, in force 21 Nov 2025 (Ministry of Labour & Employment, labour.gov.in); Social Security (Central) Rules, G.S.R. 344(E) of 8 May 2026; Payment of Gratuity Act, 1972, s.4; Income-tax Act, 1961 s.10(10) and Income-tax Act, 2025 s.19 (incometaxindia.gov.in); CBDT notification S.O. 1213(E) dated 8 Mar 2019 (₹20 lakh). Cross-checked with law-firm commentary (Mondaq, Bar & Bench, Business Today).