Gratuity Calculator India
As per Gratuity ActCalculate your gratuity amount as per the Payment of Gratuity Act 1972. Supports both covered and non-covered employees, with tax exemption status and year-wise milestone table.
Employee Type
Employment Details
As per the Gratuity Act, 6+ months rounds up to the next year.
For 5 years of service · Divisor: 26
Calculation Breakdown
Fully Tax Exempt!
Your gratuity of ₹1,44,231 is below the ₹20,00,000 exemption limit. No tax is payable on this amount.
Gratuity at Key Milestones
| Years | Gratuity |
|---|---|
| 5 years ← you | ₹1,44,231 |
| 10 years | ₹2,88,462 |
| 15 years | ₹4,32,692 |
| 20 years | ₹5,76,923 |
| 25 years | ₹7,21,154 |
| 30 years | ₹8,65,385 |
How to Calculate Gratuity
Select Employee Type
Choose whether your organisation has 10+ employees (covered under Gratuity Act) or fewer (not covered).
Enter Basic Salary
Enter your last drawn basic salary per month. DA (Dearness Allowance) is usually 0 for private sector.
Enter Service Period
Enter total years and months of continuous service. Months ≥ 6 are rounded up automatically.
Get Result
Instantly see gratuity amount, tax exemption status, formula breakdown, and milestone projections.
Gratuity Formulas
For organisations with 10 or more employees. Divisor 26 = average working days per month (excluding Sundays).
For smaller organisations not covered under the Act. Ex-gratia payments typically follow this formula.
Gratuity Eligibility Criteria
5 Years Service
Minimum 5 continuous years of employment required (except death/disability).
10+ Employees
Organisation must have 10 or more employees at any point to be covered under the Act.
All Employee Types
Covers permanent, temporary, apprentices, and piece-rate workers alike.
Triggers
Payable on retirement, resignation, death, disablement, or retrenchment.
Gratuity Tax Exemption Limits
Tax treatment differs based on employee category under the Income Tax Act:
| Employee Category | Exemption Limit |
|---|---|
| Government Employees | Fully Exempt |
| Private (Covered under Act) | Up to ₹20,00,000 |
| Private (Not Covered) | Up to ₹20,00,000 |
ℹ️The ₹20 lakh exemption limit was revised upward from ₹10 lakh by the Payment of Gratuity (Amendment) Act, 2018.
About the Payment of Gratuity Act 1972
The Payment of Gratuity Act, 1972 is a central legislation in India that makes it mandatory for certain employers to pay gratuity to their employees. The Act applies to factories, mines, oilfields, plantations, ports, railway companies, shops, and other establishments with 10 or more employees.
The gratuity amount is calculated based on the last drawn salary (Basic + DA) and the number of years of completed service. The "15 days" factor represents roughly half a month's salary per year, and the divisor (26 for covered employees) represents the average number of working days in a month.
Gratuity must be paid within 30 days from the date it becomes payable. If the employer fails to pay within this period, simple interest at the rate specified by the government is payable for the delay period.
Frequently Asked Questions
What is gratuity and who is eligible?
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for their service. Under the Payment of Gratuity Act 1972, employees who have completed at least 5 years of continuous service are eligible for gratuity upon resignation, retirement, death, or disablement.
What is the gratuity formula?
For employees covered under the Gratuity Act: Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 26. For employees not covered: Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 30. The divisor 26 represents working days in a month (excluding 4 Sundays).
Is gratuity taxable in India?
Gratuity received by government employees is fully tax-exempt. For private sector employees covered under the Gratuity Act, the exemption is the least of: actual gratuity received, ₹20,00,000, or (Last Salary × 15 × Years) ÷ 26. Any amount above ₹20 lakh is taxable as income.
What is the minimum service period for gratuity?
An employee must complete a minimum of 5 years of continuous service to be eligible for gratuity. However, in case of death or disablement, gratuity is payable regardless of the years of service completed.
How are months counted in gratuity calculation?
As per the Supreme Court ruling and Gratuity Act, if an employee has served for 6 months or more in the last year, it is rounded up to the next full year. For example, 4 years and 7 months is treated as 5 years.
What is the maximum gratuity amount?
As per the Payment of Gratuity (Amendment) Act 2018, the maximum gratuity payable is ₹20,00,000 (20 lakhs). Any gratuity beyond this limit is taxable in the hands of the employee.
What is the difference between covered and non-covered employees?
Employees working in organisations with 10 or more employees are "covered" under the Gratuity Act and use the ÷26 formula. Employees in smaller organisations are "not covered" and gratuity, if paid, uses the ÷30 formula. Once an organisation crosses 10 employees, the Act applies permanently.