Gratuity Calculator - Calculate Gratuity Amount Online
Calculate your gratuity amount based on last drawn salary and years of service. Check eligibility, understand the formula, and know tax implications.
Gratuity Calculator
Monthly Basic Salary + Dearness Allowance
Total Service: 10 years 0 months
Companies with 10+ employees are covered under the Act
Gratuity Formula
Gratuity = (15 × Last Drawn Salary × Years of Service) / 26
* Minimum 5 years of continuous service required. Months > 6 are rounded up to 1 year.
Understanding Gratuity
Gratuity is a retirement benefit provided by employers as a token of appreciation for long-term service. It's governed by the Payment of Gratuity Act, 1972, which applies to establishments with 10 or more employees.
Gratuity Formula:
Gratuity = (15 × Last Drawn Salary × Years of Service) / 26
Key Points:
- Last Drawn Salary: Basic Salary + Dearness Allowance (DA)
- 15 days: Gratuity is calculated at 15 days' wages for each year
- 26 days: Number of working days in a month (for Act-covered employees)
- Rounding: Service > 6 months is rounded up to 1 year
Gratuity Eligibility Criteria
Eligible If:
- Completed 5 years of continuous service
- Resignation after 5 years
- Retirement (superannuation)
- Death or disability (no minimum service)
- Voluntary retirement scheme (VRS)
Not Eligible If:
- Less than 5 years of continuous service
- Termination for misconduct causing damage
- Termination for moral turpitude offence
- Contract/temporary employment (unless specified)
Gratuity Tax Rules
| Category | Tax-Free Limit | Taxable Amount |
|---|---|---|
| Government Employees | Entire amount tax-free | Nil |
| Covered under Gratuity Act | Up to Rs 20 Lakhs | Amount above Rs 20L |
| Not covered under Act | Least of: Rs 20L / Actual / 15 days per year | Balance amount |
Frequently Asked Questions
What is gratuity and who is eligible?
Gratuity is a lump sum benefit paid by employers to employees upon resignation, retirement, or death. To be eligible, you need minimum 5 years of continuous service with the same employer. The Payment of Gratuity Act, 1972 covers establishments with 10 or more employees.
How is gratuity calculated?
Gratuity = (15 × Last Drawn Salary × Years of Service) / 26. Last drawn salary includes Basic + Dearness Allowance. For employees not covered under the Act, the divisor is 30 instead of 26. Service above 6 months is rounded up to 1 year.
What is the maximum gratuity limit?
The maximum gratuity limit is Rs 20,00,000 (20 Lakhs) as per current law. Any gratuity amount above this limit may be taxable. This limit was increased from Rs 10 Lakhs to Rs 20 Lakhs in 2019.
Is gratuity taxable?
Gratuity received up to Rs 20 Lakhs is completely tax-free for employees covered under the Payment of Gratuity Act. For government employees, entire gratuity is tax-free. Any amount above Rs 20 Lakhs is taxable as per your income tax slab.
Can I get gratuity before 5 years?
Generally, you need 5 years of continuous service to be eligible. However, in case of death or disability, gratuity is payable regardless of service period. Some companies may have policies for voluntary gratuity before 5 years.