Gratuity Calculator
Calculate the gratuity amount you are eligible to receive after 5 years of service.
Employment Details
Include Basic Pay and Dearness Allowance only.
Minimum 5 years of continuous service required.
Gratuity Estimate
Payable Gratuity
₹0
Tax Exemption limit for Gratuity is ₹20 Lakhs.
Understanding Gratuity
Gratuity is a monetary benefit given by an employer to an employee for their services. It is governed by the Payment of Gratuity Act, 1972.
The Calculation Formula
The standard formula for employees covered under the Act is:
Gratuity = (Basic + DA) × 15/26 × Years
- 15/26: Represents 15 days salary for every completed year, considering 26 working days in a month.
- Years: Rounded to the nearest year (e.g., 6 years 7 months = 7 years).
Tax Rules (2025 Update)
- Government Employees: 100% Tax-Free.
- Private Employees: Tax-free up to a limit of ₹20 Lakhs (Lifetime aggregate). Any amount above this is added to your income and taxed at your slab rate.
Frequently Asked Questions
Who is eligible for Gratuity?
An employee who has completed at least 5 years of continuous service with the same employer is eligible for gratuity. In case of death or disablement, the 5-year rule is waived.
Is Gratuity taxable?
Gratuity received by government employees is fully exempt. For private sector employees covered under the Payment of Gratuity Act, it is tax-free up to ₹20 Lakhs in a lifetime.
How is 5 years calculated?
According to a court ruling, if an employee completes 4 years and 240 days of service, it is often rounded off to 5 years for gratuity eligibility in many organizations.
What is the formula for Gratuity?
Gratuity = (Last Drawn Basic Salary + DA) × 15/26 × Number of Years of Service. Here, 15 represents 15 days' wages per year, and 26 represents working days in a month.
What if my company is not covered under the Gratuity Act?
If the company is not covered, the formula changes slightly: Gratuity = (Average Salary of Last 10 Months) × 15/30 × Years of Service.
Does Gratuity include HRA or Special Allowance?
No. Gratuity is calculated ONLY on the Basic Salary and Dearness Allowance (DA). Other allowances like HRA, LTA, or Special Allowance are excluded.
Can an employer deny Gratuity?
No, gratuity is a statutory right. An employer cannot deny it if you are eligible, except in cases of termination due to 'riotous or disorderly conduct' or 'moral turpitude'.
Can I get Gratuity if I resign?
Yes, as long as you have completed 5 years of service before your last working day, you are entitled to gratuity upon resignation.
Is Gratuity applicable to contract employees?
Yes, contract employees are also eligible for gratuity if they meet the 5-year continuous service criterion with the same employer.
When is Gratuity paid?
It is usually paid as a lump sum along with the Full & Final (F&F) settlement after you leave the job or retire.