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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.
Formula: (Basic + DA) × (Years of Service / 26)
Applicable for: Minimum 5 years of service
Note: Maximum gratuity is limited by government rules.
⚠️ 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
Government employee gratuity uses the following standard formula:
Gratuity = (Basic Pay + Dearness Allowance) × (Completed Years of Service ÷ 26)
The number 26 represents the assumed number of working days in a month (excluding 4 Sundays), so each completed year of service effectively contributes half a month's salary (Basic + DA) toward the final gratuity corpus.
Worked Example
An employee with a revised 8th CPC Basic Pay of ₹50,000, DA of ₹20,000, and 30 completed years of service would calculate gratuity as: (₹50,000 + ₹20,000) × (30 ÷ 26) = ₹70,000 × 1.1538 = approximately ₹80,769.
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: Government rules cap the maximum payable gratuity (historically revised upward with each Pay Commission — expect this ceiling to rise again under the 8th CPC).
- Tax treatment: Gratuity received by government employees is generally fully exempt from income tax under Section 10(10) of the Income Tax Act, subject to the prescribed ceiling.
- 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)
| Completed Years of Service | Gratuity as Months of (Basic + DA) |
|---|---|
| 5 years | 0.19 months |
| 10 years | 0.38 months |
| 15 years | 0.58 months |
| 20 years | 0.77 months |
| 25 years | 0.96 months |
| 30 years | 1.15 months |
| 33 years | 1.27 months |