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.
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).