As per Payment of Gratuity Act, 1972
Gratuity Amount
₹0
Eligible
| Tax-free limit | ₹20,00,000 |
| Your gratuity | ₹0 |
| Taxable amount | ₹0 |
| Status | Tax-Free |
Formula: (Last Salary × 15 × Years) ÷ 26 (covered) or ÷ 30 (not covered). Capped at ₹20 lakh.
A gratuity calculator for 5 years service helps you find out exactly how much your employer must pay you when you leave after completing five years. Enter your last drawn salary and years worked — the tool does the rest in seconds.
A gratuity calculator for 5 years service is a free online tool that computes the lump-sum gratuity amount an employee is legally entitled to after completing five continuous years with one employer.
Gratuity is a retirement benefit. It is paid by your employer as a thank-you for long service. Under the Payment of Gratuity Act, 1972, any company with 10 or more employees must pay gratuity. And five years is the minimum service required to claim it.
So if you resign, retire, or get terminated after five years — you have a legal right to this money. Many employees don’t know how much they’re owed. That’s exactly where the gratuity calculator for 5 years service helps.
The formula used by the gratuity calculator for 5 years service is straightforward. It is the same formula defined in the Payment of Gratuity Act.
📐 Formula: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
Here, “Last Drawn Salary” means Basic Pay + Dearness Allowance (DA). It does not include HRA, bonus, or other allowances. The number 26 represents the average working days in a month. And 15 is the number of days’ salary given for each completed year of service.
For 5 years service specifically, the formula becomes: (Salary × 15 × 5) ÷ 26. Simple. But the salary figure must be correct — that’s where most people make mistakes.
Only Basic Pay + DA is used. Not your full CTC. Not HRA. Not food allowance. So if your CTC is ₹10 lakh but basic is ₹4 lakh, the gratuity is calculated on the ₹4 lakh figure — not ₹10 lakh.
Yes — up to ₹20 lakh. Under Section 10(10) of the Income Tax Act, gratuity received by government employees is fully tax-free. For private sector employees covered under the Payment of Gratuity Act, it is tax-free up to ₹20 lakh. Anything above that is taxable. For most 5-year employees, the full payout falls well within this limit.
You can confirm the current tax exemption rules on the Income Tax India official website.
Use the free gratuity calculator above to get your number in under 30 seconds. Bookmark this page for future reference when you change jobs.
Here are three real-salary examples calculated using the gratuity calculator for 5 years service. All figures use Basic + DA only.
| Basic Salary | Formula Used | Gratuity (5 Yrs) | Tax Status |
|---|---|---|---|
| ₹20,000/mo | (20,000×15×5)÷26 | ₹57,692 | Tax-free |
| ₹30,000/mo | (30,000×15×5)÷26 | ₹86,538 | Tax-free |
| ₹50,000/mo | (50,000×15×5)÷26 | ₹1,44,231 | Tax-free |
| ₹80,000/mo | (80,000×15×5)÷26 | ₹2,30,769 | Tax-free |
All four examples fall well under the ₹20 lakh tax-free limit. So for most employees completing 5 years, the entire gratuity payout is yours — no deductions.
Tax calculations are indicative. Consult a CA for your specific situation.
Wondering how your gratuity grows each year? Here’s a quick look for someone earning ₹30,000/month as basic salary.
| Year | Formula | Gratuity Amount |
|---|---|---|
| 1 Year | (30,000×15×1)÷26 | ₹17,308 |
| 2 Years | (30,000×15×2)÷26 | ₹34,615 |
| 3 Years | (30,000×15×3)÷26 | ₹51,923 |
| 4 Years | (30,000×15×4)÷26 | ₹69,231 |
| 5 Years | (30,000×15×5)÷26 | ₹86,538 |
Note: You can only claim gratuity after completing 5 continuous years. The years 1–4 amounts above are informational only. Your employer is not legally bound to pay until you cross the 5-year mark.
The gratuity calculator for 5 years service gives an estimate — but your final payout can vary based on a few things.
A few smart moves can make a real difference to your gratuity amount.
When joining a new company, ask for a higher basic salary — even if total CTC stays the same. Since gratuity is based on basic + DA, a ₹5,000 increase in basic adds roughly ₹14,000 to your 5-year gratuity. Over a career, this compounds significantly.
If you’re at 5 years and 5 months — wait. Just one more month puts you at 5 years 6 months, which legally rounds up to 6 completed years. That means one extra year of gratuity added to your payout. Simple patience, real money.
Gratuity is just one piece. You should also track your EPF balance and use a salary calculator to see your complete exit package. For long-term wealth planning, pair these with a retirement calculator to see how much corpus you’ll actually need.
Also remember — your employer must pay gratuity within 30 days of it becoming due. If they delay, they owe you interest on the unpaid amount.
A: The gratuity calculator for 5 years service uses the formula: (Last Drawn Basic + DA × 15 × 5) ÷ 26. You enter your monthly basic salary and the tool instantly shows your estimated gratuity payout. It follows the Payment of Gratuity Act, 1972 formula used across India.
A: There is no minimum salary. Any employee covered under the Payment of Gratuity Act who has completed 5 years of continuous service is eligible — regardless of salary. Even a ₹15,000/month basic salary earns you around ₹43,269 as gratuity after 5 years.
A: No — for most employees. Under Section 10(10) of the Income Tax Act, gratuity is tax-free up to ₹20 lakh for private sector employees covered under the Payment of Gratuity Act. In FY2025–26, any payout below ₹20 lakh is fully exempt. Government employees get full exemption with no upper limit.
A: Yes. Voluntary resignation after 5 continuous years makes you fully eligible for gratuity. The gratuity calculator for 5 years service works the same regardless of exit reason — whether you resign, retire, or are retrenched. The only exception is dismissal for proven misconduct.
A: File a complaint with the Controlling Authority under the Payment of Gratuity Act — typically the Labour Commissioner of your state. Employers must pay within 30 days of the gratuity becoming due. Delayed payment attracts interest. Willful refusal can result in criminal prosecution under the Act.
