Gratuity Calculator
Calculate gratuity amount based on last drawn salary and service years. Eligibility: 5+ years of continuous service.
Gratuity Details
₹
Monthly basic + DA at time of leavingyears
Completed years (min 5 for eligibility)months
Extra months (6+ months = 1 year)Applies to companies with 10+ employees
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Enter your details to calculate gratuity
Understanding 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.
Eligibility Criteria
- Minimum Service: 5 years of continuous service (exception: death/disability)
- Applicable to: Companies with 10 or more employees
- Payment Time: Within 30 days of becoming eligible
- Maximum Amount: ₹20,00,000 (tax-free)
Gratuity Calculation Formula
Covered under Act (26-day divisor):
Gratuity = (Last Salary × Years × 15) ÷ 26
Not covered (30-day divisor):
Gratuity = (Last Salary × Years × 15) ÷ 30
When is Gratuity Paid?
- Resignation: After completing 5 years
- Retirement: On reaching retirement age
- Death: Paid to nominee/legal heir (no 5-year requirement)
- Disability: Due to accident/disease (no 5-year requirement)
Tax Rules
- Government employees: Fully tax-free (no limit)
- Private sector (covered): Tax-free up to ₹20 lakh
- Amount above ₹20L: Taxable as salary income
- Both regimes: ₹20L exemption under Section 10(10)
Example Calculations
Example 1: Within Limit
- Last Basic: ₹50,000 | Service: 10 years
- (₹50,000 × 10 × 15) ÷ 26 = ₹2,88,461 — fully tax-free
Example 2: Above ₹20L
- Gratuity calculated: ₹25,00,000
- Tax-free: ₹20,00,000 | Taxable: ₹5,00,000
- Tax @ 30%: ₹1,50,000 | Net in hand: ₹23,50,000
Important Points
- 6+ extra months counts as a full additional year
- Forfeiture: Allowed only for misconduct causing loss to employer
- Nomination: Mandatory — file Form F with employer
- Delayed payment: Employer must pay interest if delayed beyond 30 days