The calculation in three steps
- Take your last drawn monthly wages: basic pay + dearness allowance = ₹30,000.
- Work out 15 days’ wages: ₹30,000 × 15 ÷ 26 = ₹17,308. The law treats a month as 26 working days.
- Multiply by years of service: ₹17,308 × 5 = ₹86,538.
That is your gratuity. Because it is far below the ₹20 lakh limit, it is completely tax-free for a private-sector employee covered by the law, in both the old and the new tax regime.
Other salaries, 5 years of service
| Basic + DA per month | 15 days’ wages | Gratuity for 5 years |
|---|---|---|
| ₹15,000 | ₹8,654 | ₹43,269 |
| ₹20,000 | ₹11,538 | ₹57,692 |
| ₹25,000 | ₹14,423 | ₹72,115 |
| ₹30,000 | ₹17,308 | ₹86,538 |
| ₹40,000 | ₹23,077 | ₹1,15,385 |
| ₹50,000 | ₹28,846 | ₹1,44,231 |
| ₹75,000 | ₹43,269 | ₹2,16,346 |
| ₹1,00,000 | ₹57,692 | ₹2,88,462 |
Quick rule of thumb: for 5 years, your gratuity is roughly 2.9 months of basic + DA (15/26 × 5 = 2.88).
Is “5 years” really 5 years?
For permanent employees, gratuity needs 5 years of continuous service. A few friendly points:
- 4 years and 240 days: courts have often counted this as 5 years for workers in establishments with a 6-day week, because a year of continuous service can mean 240 working days. It is worth raising with HR if you are just short; the outcome depends on your facts.
- Death or disablement: no minimum service applies.
- Fixed-term employees: since 21 November 2025, gratuity is payable after just 1 year (see our fixed-term guide).
- Breaks for leave, strikes that are not illegal, or lay-off do not break continuous service.
Does it matter if I resign, retire or am laid off?
Not for the amount. Gratuity is payable on superannuation, retirement, resignation, death or disablement, and termination of employment, using the same formula. The only exception is dismissal for certain serious misconduct (for example, causing wilful damage to the employer’s property, or riotous behaviour), where the employer may forfeit some or all of it.
Getting paid
Apply to your employer (usually in a form your HR team provides) when you leave. Gratuity must be paid within 30 days of it becoming payable; if it is late, the employer owes simple interest. It is usually paid with your full and final settlement.
If your employer has fewer than 10 employees and is not covered by the law, gratuity depends on your contract. Choose “Not covered” in the calculator to see the tax-free amount on that basis.
FAQ
How much gratuity for 5 years with ₹30,000 basic + DA?
15/26 × ₹30,000 × 5 = ₹86,538. It is fully tax-free because it is well below ₹20 lakh.
Is gratuity paid if I resign after exactly 5 years?
Yes. Permanent employees qualify after 5 years of continuous service, whether they resign, retire or are let go (except dismissal for certain misconduct, where it can be forfeited).
How much gratuity for 5 years on ₹50,000 basic?
15/26 × ₹50,000 × 5 = ₹1,44,231, also fully tax-free.
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).