Gratuity Calculator
Calculate your gratuity amount as per the Payment of Gratuity Act 1972
Your Details
Most private and government employees are covered by the Payment of Gratuity Act 1972.
Months ≥ 6 are rounded up to the next year as per the Act.
Total Gratuity Amount
for 10.0 years of service
Breakdown
Tax exemption limit is ₹20 lakh as per current Income Tax rules. Actual tax liability depends on your total income and applicable slab. Consult a chartered accountant for personalised advice.
Are you eligible for gratuity?
You qualify if you have completed 5 or more continuous years of service with the same employer, and the organization has 10+ employees (covered under the Act). If your final year's service exceeds 6 months, it rounds up — so 4 years and 7 months counts as 5 years. Exception: gratuity is payable regardless of tenure in case of death or disability during service.
Gratuity formula: covered vs uncovered employees
Uses 26 working days/month. For a ₹60,000 salary with 12 years service: (15 × 60,000 × 12) ÷ 26 = ₹4,15,385. Applies to organizations with 10+ employees registered under the Payment of Gratuity Act.
Uses 30 calendar days/month. Same salary and tenure: (15 × 60,000 × 12) ÷ 30 = ₹3,60,000. That's ₹55,385 less for the exact same service. Applies to smaller establishments not covered by the Act.
Gratuity tax rules
Gratuity up to ₹20 lakh is completely tax-free. Any excess is taxed as salary income at your applicable slab rate. This limit was raised from ₹10 lakh to ₹20 lakh in March 2019.
The entire gratuity amount received by central and state government employees is exempt from income tax, with no upper limit. This applies to civil services, defense, and all government undertakings.
If an employee dies during service, gratuity is payable to the nominee regardless of years served. The 5-year minimum service requirement is waived. The same tax exemption limits apply to the nominee.
When should the employer pay?
Under the Payment of Gratuity Act, the employer must pay gratuity within 30 days of it becoming due (i.e., from the date of separation). If they delay beyond 30 days, they must pay simple interest on the amount at the rate notified by the central government. Many employees don't know this — if your employer is delaying payment, you can file a complaint with the Controlling Authority under the Act.
Key Terms
Gratuity
A lump-sum payment made by an employer to an employee upon separation as a reward for long-term service — mandated by the Payment of Gratuity Act 1972.
Last Drawn Salary
Basic salary plus dearness allowance (DA) at the time of leaving. Excludes HRA, bonuses, and other allowances.
Completed Years
Total years of continuous service. If the final year's service exceeds 6 months, it rounds up to the next full year.
Payment of Gratuity Act 1972
Indian legislation that mandates gratuity payment to employees who have served 5+ years in establishments with 10 or more workers.