Gratuity Calculator
Calculate your gratuity amount under the Payment of Gratuity Act. See your tax-exempt and taxable portions instantly.
Salary & Service Details
Tax Treatment
Exemption under Section 10(10) of IT Act. Statutory max ₹20L (w.e.f. 29-Mar-2018). Different rules apply for government employees. Consult HR or a CA for exact figures.
Understanding the Gratuity Calculator
The Gratuity Calculator (India) estimates the lump-sum gratuity a private-sector employee in India has earned under the Payment of Gratuity Act, 1972. Enter your last drawn monthly salary (Basic + Dearness Allowance) and your total length of service in years and months, and the tool instantly computes your gratuity using India's statutory 15-days-per-year formula. It rounds your final year up when you have served six months or more, flags whether you meet the five-year eligibility threshold, and shows how the Rs 20 lakh tax-free limit applies. Everything runs in your browser, so your salary details never leave your device.
How it works
Gratuity rewards long service. Under India's Payment of Gratuity Act, 1972, covered employees are granted 15 days of wages for every completed year of service, treating a month as 26 working days. You supply your last drawn salary (Basic + DA) and your years and months of service. The calculator rounds the final year up if it includes six months or more, then applies the formula below. It checks the five-year continuous-service rule and warns you if you fall short (waived for death or disablement). Finally it compares the result against the Rs 2,000,000 lifetime tax-free cap, marking any excess as taxable salary income so you see both the gross and exempt amounts.
Worked Example
Suppose your last drawn salary (Basic + DA) is Rs 50,000 and you have worked 10 years and 7 months. Because the final 7 months is six months or more, service rounds up to 11 years. Gratuity = (50,000 x 15 x 11) / 26 = Rs 3,17,308. Since this is below the Rs 20 lakh tax-free cap, the entire amount is exempt from income tax in India. Had it exceeded Rs 20 lakh, only the portion above the cap would be taxed at your slab rate.
Tips & Common Mistakes
- Use only Basic salary plus Dearness Allowance (DA) as the salary input - do not include HRA, bonuses, or other allowances.
- Service of six months or more in your final year rounds that year up; less than six months is dropped, so timing your exit can matter.
- You generally need five years of continuous service to qualify, but this minimum is waived if employment ends due to death or disablement.
- Gratuity is tax-free up to Rs 20 lakh (Rs 2,000,000) across your entire career in India, not per employer - track cumulative gratuity received.
- This formula applies to employees covered by India's Payment of Gratuity Act, 1972; for non-covered employees the divisor changes to 30 days and rounding differs.
- Government employees in India often receive gratuity under separate rules with a higher ceiling, so confirm which scheme applies to you.
Sources & Methodology
- →Payment of Gratuity Act, 1972 (Government of India)
- →Income Tax Act, 1961 - Section 10(10) gratuity exemption
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Built and maintained by TopOpenTools · Last updated June 2026. These tools provide general estimates for educational purposes only and are not financial, tax, insurance, investment, or medical advice. Verify important decisions with a qualified professional.
Frequently Asked Questions
What is the formula to calculate gratuity?
For employees covered under the Payment of Gratuity Act (companies with 10 or more employees): Gratuity = (Last drawn Basic + DA) × 15 ÷ 26 × Years of service. The divisor 26 represents working days in a month; 15 represents 15 days of salary per year. For employees not covered under the Act, the formula uses 30 as the divisor instead of 26.
How many years of service are required to be eligible for gratuity?
A minimum of 5 years of continuous service is required to claim gratuity. However, for employees covered under the Act, if a fraction of a year exceeds 6 months, it is rounded up to 1 full year. For example, 5 years and 7 months counts as 6 years. For death and disability cases, the 5-year minimum requirement is waived.
What is the maximum gratuity amount allowed?
The maximum tax-exempt gratuity is ₹20 lakh (₹20,00,000) as per the Payment of Gratuity (Amendment) Act, 2018, effective from 29 March 2018. Any gratuity received above ₹20 lakh from private sector employers is taxable as salary income. For government employees, the gratuity is fully exempt regardless of the amount.
Is gratuity taxable?
Gratuity is exempt under Section 10(10) of the Income Tax Act, subject to limits. For private sector employees covered under the Gratuity Act, the least of the following is exempt: (1) actual gratuity received, (2) ₹20 lakh, (3) 15 days salary × years of service. For government employees, the entire gratuity is tax-free. Gratuity received above the exemption limit is taxable as salary.
Is gratuity calculated on basic salary or CTC?
Gratuity is calculated on Basic Salary + Dearness Allowance (DA) only — not on total CTC, HRA, or other allowances. The formula specifically uses Basic + DA as the salary component. In the CTC structure, the gratuity provision is typically 4.81% of Basic Salary per year (which equals 15/26 × 1/12 of monthly Basic × 12 months).