Gratuity Calculator
Calculate your gratuity based on Indian labor laws.
Salary Details
Service Duration
Employment Details
Result
| Effective Salary (Basic + DA) | ₹50,000/month |
| Service Considered | 10 years |
| Formula | (Basic + DA) × 15 × Years / 26 |
| Maximum Limit | ₹20,00,000 |
Note: This calculator follows the Payment of Gratuity Act, 1972. The maximum tax-free gratuity is ₹20 lakh (as of 2019). For death or disability, no minimum service is required.
What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered. It is governed by the Payment of Gratuity Act, 1972, and is applicable to organizations with 10 or more employees.
Eligibility: You must have completed at least 5 years of continuous service (except in case of death or disability) to be eligible for gratuity.
How is Gratuity Calculated?
Formula: (Last Drawn Salary × 15 × Years of Service) ÷ 26
- • Last Drawn Salary: Basic salary + Dearness Allowance (DA)
- • 15: Number of days of salary for each completed year
- • 26: Average working days in a month (for companies with 6-day week)
- • Note: For companies with 5-day week, use 30 instead of 26
Tax Treatment
Government Employees: Entire gratuity amount is tax-free.
Private Sector (Covered under Act): Tax-free up to ₹20 lakhs. Any amount above this limit is taxable as per your income tax slab.
Private Sector (Not covered under Act): Least of the following is tax-free:
- • ₹20 lakhs
- • Actual gratuity received
- • (Last drawn salary × Years of service × 15) ÷ 30
💡 Important Points
- ✓Gratuity must be paid within 30 days of it becoming due
- ✓Maximum gratuity amount is capped at ₹20 lakhs (as per current rules)
- ✓Partial years of service (6+ months) are rounded up to a full year
- ✓In case of death/disability, 5-year service requirement is waived
- ✓Gratuity is payable even if employee resigns after 5 years