Finance · Free tool
Gratuity Calculator
Calculate your gratuity using the Payment of Gratuity Act, 1972 formula. Eligibility requires 5+ years of continuous service. The maximum gratuity payable is ₹20 lakh (raised from ₹10 L in March 2018).
Most employers with 10+ employees are covered.
- Years counted
- 7 (≥6mo rounds up)
- Tax-exempt up to
- ₹20,00,000
The formula
- Covered under the Act: (last basic + DA) × 15/26 × years
- Not covered: (last basic + DA) × 15/30 × years
The 15/26 reflects the assumption that there are 26 working days in a month (excluding weekly off). Most employers with 10+ employees fall under the Act.
Tax on gratuity
For covered employees, gratuity up to ₹20 lakh is tax-exempt. The excess is taxed at slab rate. Govt employees get unlimited exemption.
When you get it
Gratuity is paid on resignation, retirement, death, or disability — provided you've completed 5 years. Some courts have held 4 years 240 days as equivalent to 5 years for this purpose. Death/disability waives the 5-year requirement.
FAQ
When am I eligible for gratuity?
After 5 years continuous service. Death/disability — paid even before 5 years. Employer must be covered (10+ employees in establishment).
Tax on gratuity?
Up to ₹20 lakh exempt (section 10(10)). Beyond that, taxable at slab. For govt employees, fully exempt. Lifetime cap — multiple gratuities can't exceed ₹20L total.
How is gratuity calculated?
Last drawn basic + DA × 15/26 × years of service. The 15/26 represents 15 days of pay per year (approximated as half a month).