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Gratuity Calculator

Calculate gratuity amount based on your salary and years of service.

₹
years

Results

Gratuity Amount₹3.46 L
Tax Exempt (max)₹3.46 L
Taxable Gratuity₹0
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What is Gratuity?

Gratuity is a lump sum amount paid by the employer to an employee as a token of appreciation for long and meritorious service. It is governed by the Payment of Gratuity Act, 1972, and is mandatory for all establishments with 10 or more employees.

To be eligible for gratuity, an employee must complete a minimum of 5 years of continuous service with the same employer. However, in case of death or disability, gratuity is payable even if the employee has not completed 5 years. The Supreme Court has also ruled that 4 years and 240 days of service qualifies as 5 years for gratuity purposes.

Gratuity is a significant amount that many employees overlook during career planning. For someone with a last drawn basic+DA of ₹60,000 and 15 years of service, the gratuity amount is approximately ₹5,19,231 — essentially 8.5 months of basic salary for free.

Gratuity up to ₹20 Lakhs is completely tax-exempt for employees covered under the Gratuity Act. For government employees, the entire gratuity amount is tax-exempt regardless of the amount. Any gratuity exceeding ₹20 Lakhs is taxable at your income tax slab rate.

Most companies include gratuity provision (4.81% of basic) as part of CTC. However, you only receive the actual payment when you leave the company after completing 5 years. If you leave before 5 years, you forfeit the entire gratuity amount.

Planning your exit from a company? Use our Salary Calculator to see the full CTC breakdown and EPF Calculator to estimate your provident fund corpus.

Formula

Gratuity = Last Drawn Basic + DA × 15 × Years of Service / 26

Where: - Last Drawn Salary = Basic Salary + Dearness Allowance (as on date of leaving) - 15 = Number of days of wages for each completed year - 26 = Working days in a month - Years of service are rounded: 6 months or more counts as a full year

Worked Example — Basic+DA ₹60,000, 10 years of service: Gratuity = 60,000 × 15 × 10 / 26 = ₹3,46,154

Gratuity at different service periods (Basic ₹60,000): - 5 years: ₹1,73,077 - 10 years: ₹3,46,154 - 15 years: ₹5,19,231 - 20 years: ₹6,92,308 - 25 years: ₹8,65,385 - 30 years: ₹10,38,462

Tax Exemption: Minimum of (1) Actual gratuity received, (2) ₹20,00,000, (3) 15 days salary per year of service = the exempt portion.

How to use this Gratuity Calculator?

1. Enter Last Drawn Basic + DA: This is your most recent monthly basic salary plus dearness allowance. Check your latest salary slip. If you receive only basic (no DA), enter just the basic amount.

2. Enter Years of Service: Total completed years. Service of 6 months or more in the last year is rounded up. For example, 10 years 7 months counts as 11 years.

3. Read Results: See your gratuity amount, tax-exempt portion (capped at ₹20 Lakhs), and any taxable amount above the exemption limit.

Pro tip: If you are close to completing 5 years at your current company, consider staying until you complete 5 years to claim gratuity. Even a few extra months of service can mean ₹1-3 Lakhs of additional tax-free income.

Frequently asked questions

Is gratuity mandatory after 5 years?
Yes, under the Payment of Gratuity Act, employers with 10+ employees MUST pay gratuity to employees completing 5 years of continuous service. Once an establishment is covered, it remains covered even if employee count drops below 10. The Supreme Court has ruled that 4 years and 240 days counts as 5 years for gratuity eligibility.
Is gratuity part of CTC?
Yes, most private companies include gratuity provision (calculated as 4.81% of basic salary) in CTC. However, you only receive the actual payment when you resign, retire, or are terminated after completing 5 years. If you leave before 5 years, the company keeps the gratuity provision.
What is the maximum gratuity tax exemption?
For private sector employees covered under the Gratuity Act: ₹20,00,000 (increased from ₹10 Lakhs in 2019). For government employees: the entire gratuity is tax-exempt without any upper limit. Any amount exceeding the exemption is taxed at your income slab rate.
Can an employer deny gratuity?
An employer can forfeit gratuity (fully or partially) only if the employee is terminated for: (1) moral turpitude, or (2) causing damage to employer's property. For any other reason including voluntary resignation, retrenchment, retirement, or redundancy, gratuity MUST be paid within 30 days of it becoming due.
How is gratuity calculated for part years?
Service of 6 months or more in the final year is rounded up to the next full year. Less than 6 months is ignored. Example: 7 years 8 months = 8 years for gratuity calculation. 7 years 4 months = 7 years.
Is gratuity the same as provident fund?
No. Gratuity is a one-time lump sum paid at the time of leaving the company (after 5 years). EPF (Employee Provident Fund) is a monthly contribution (12% employee + 12% employer) that accumulates throughout your employment and can be withdrawn when you leave. Both are separate entitlements.
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