Gratuity Calculator

Calculate your gratuity entitlement based on last drawn salary and years of service.

Last Drawn Basic + DA (₹/month)

₹

Years of Service (e.g. 5.8)

Covered under Payment of Gratuity Act?

Employee Type (for tax exemption)

Enter your salary and service details to calculate gratuity

How gratuity is calculated

Covered under Gratuity Act

Gratuity = (Basic + DA) × 15/26 × Years

15 days' wages for each completed year. Denominator 26 = working days per month. Maximum ₹20 lakh. Eligibility: minimum 5 years of continuous service.

Not Covered (Ex-Gratia)

Gratuity = (Basic + DA) × 15/30 × Years

15 days' wages based on 30-day month. No statutory maximum but typically limited to ₹20L for tax purposes.

Gratuity tax treatment

Government Employees

Gratuity received by central/state government employees is fully exempt from income tax with no upper limit.

Private Sector (Act applies)

Exempt up to ₹20 lakh. Any gratuity above ₹20 lakh is added to income and taxed at applicable slab rate.

Not Covered by Act

Exempt up to the least of: actual gratuity, half month's salary per year, or ₹20 lakh. Balance is taxable.

Frequently asked questions

What is the minimum service for gratuity eligibility?

Under the Payment of Gratuity Act, an employee must complete at least 5 years of continuous service to be eligible for gratuity. However, in the event of death or disability, gratuity is payable even if 5 years are not completed.

How are years of service counted for gratuity?

Each completed year of service counts. A fraction of a year exceeding 6 months is rounded up to a full year for calculation purposes. For example, 10 years and 8 months = 11 years. 10 years and 4 months = 10 years.

What is the maximum gratuity payable?

The maximum gratuity payable under the Payment of Gratuity Act is ₹20 lakh (₹20,00,000). This ceiling was last revised in 2018. An employer can pay more as ex-gratia, but the tax exemption is limited to ₹20 lakh for private sector employees.

When must gratuity be paid?

Gratuity must be paid within 30 days of the employee becoming eligible (resignation, retirement, death, disablement). If payment is delayed beyond 30 days, the employer must pay simple interest on the outstanding amount.

Is gratuity applicable to contract employees?

Contract employees working through a contractor are covered if they complete 5 years of continuous service with the same principal employer, regardless of the contract employer. Fixed-term contract employees are also entitled to gratuity on pro-rata basis under recent amendments.