Gratuity Calculator India
Calculate your estimated statutory gratuity payout based on continuous completed years of service and last drawn basic salary plus Dearness Allowance (DA).
Employment Details
Enter last drawn monthly basic pay plus Dearness Allowance (DA) only.
Standard eligibility requires minimum 5 continuous completed years of service.
Calculated using statutory 15/26 formula for 10 years of service.
Gratuity Breakdown & Tax Scope
- Output is an estimated statutory gratuity entitlement based on the standard 15/26 formula
- Minimum 5 continuous completed years of service required for standard eligibility
- Under second proviso to Section 4(1), 5-year vesting requirement is waived if termination is caused by death or disablement
- Salary input considers only last drawn Basic salary plus Dearness Allowance (DA)
- Statutory tax-free exemption ceiling of ₹20,00,000 applies across career under Section 10(10)
- Employers with 10 or more employees are legally covered under the Act
Gratuity Entitlement & Taxation Fact Triples
Continuous service formulas, 26-day working divisor, and statutory tax exemption ceilings.
- Statutory Gratuity Computation Formula
- Gratuity entitlement is computed as: (15 × Last Drawn Basic Salary + DA × Completed Years of Service) / 26. A month is legally reckoned as 26 working days.
- Statutory Tax Exemption Ceiling
- The maximum lifetime cumulative tax-free gratuity exemption for private-sector employees covered under the Act is ₹20,00,000 (increased from ₹10 Lakhs by Central Government notification).
- Continuous Service Vesting Waiver for Death / Disablement
- While 5 years of continuous service is ordinarily mandatory, this requirement is waived where termination of employment is due to death or permanent disablement of the employee.
Frequently Asked Questions
What is gratuity and who is eligible for it?
Gratuity is a lump sum payment made by employer to employee as a retirement benefit. Eligibility: You must complete minimum 5 years of continuous service (except in case of death/disability). Covered under Payment of Gratuity Act, 1972 for companies with 10+ employees.
How is gratuity calculated?
Formula: (Last drawn salary × 15 days × Years of service) / 26. 'Last drawn salary' includes Basic + DA. Maximum limit is ₹20 lakhs as per law. Example: ₹50,000 salary, 10 years service = (50,000 × 15 × 10) / 26 = ₹2,88,462.
Is gratuity taxable?
For employees covered under the Gratuity Act, up to ₹20 lakh is tax-free. Amount beyond ₹20L is taxable as per your income tax slab. For government employees, entire gratuity is tax-free. For employees not covered under the Act, ₹10L exemption applies (whichever is less of actual/calculated amount).
When is gratuity paid?
Gratuity is paid at: (1) Retirement after 5+ years service, (2) Resignation after 5+ years, (3) Death or disability (no minimum tenure required), (4) Superannuation. Employer must pay within 30 days of gratuity becoming payable.
Can my employer refuse to pay gratuity?
No, if you've completed 5 years of service in a company with 10+ employees, gratuity is your legal right. Employer can refuse only if you're dismissed for moral turpitude, violence, or misconduct causing loss to employer. Otherwise, it's mandatory.
What happens to gratuity if I change jobs?
Gratuity is employer-specific. If you leave before 5 years, you're not eligible (exceptions: death/disability). After 5 years, you get gratuity from that employer. In new job, your gratuity clock starts from zero. Each employer pays separately based on their tenure.
How to Use This Calculator
- 1
Enter your last drawn monthly salary (Basic + Dearness Allowance). Don't include HRA, bonuses, or other allowances.
- 2
Input your completed years of service with your current employer. Partial years can be entered as decimals (e.g., 10.5 years).
- 3
Click 'Calculate Gratuity' to see your gratuity amount as per the legal formula.
- 4
The result shows your estimated gratuity payment, which will be paid when you retire, resign (after 5 years), or in case of death/disability.
Key Terms & Definitions
- Gratuity
- A retirement benefit paid by employer to employee for long service, calculated based on last salary and tenure.
- Payment of Gratuity Act, 1972
- Indian law governing gratuity payments, eligibility, calculation, and maximum limits for employees.
- Continuous Service
- Uninterrupted employment with the same employer. Includes authorized leave, layoff, strike, and lock-out periods.
- Last Drawn Salary
- Last month's Basic + DA. Does not include HRA, bonuses, commissions, or other allowances.
- 15 Days Salary
- In the gratuity formula, '15 days' refers to 15/26 of monthly salary (assuming 26 working days in a month).
Formulas & Calculations
Gratuity Calculation Formula
Salary = Basic + DA only. Example: ₹60,000 salary, 8 years service = (60,000 × 15 × 8) / 26 = ₹2,76,923. Maximum capped at ₹20 lakh.
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