Gratuity Calculator
Easily calculate your Gratuity
Total Gratuity Payable to You
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What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for their long-term service. It is governed by the Payment of Gratuity Act, 1972 in India. Employees who have completed at least five years of continuous service with the same employer are eligible to receive gratuity upon retirement, resignation, or death/disability.
How is Gratuity Calculated?
The formula for calculating gratuity under the Payment of Gratuity Act is:
- Last Drawn Monthly Salary includes basic salary + dearness allowance (DA).
- 15 is the number of days' salary for each year worked.
- 26 is the number of working days in a month (as per Act).
- Years are rounded to the nearest full year. Any service over 6 months counts as a full year.
Who is Eligible for Gratuity in India?
An employee becomes eligible for gratuity if they meet the following conditions:
- Has completed at least 5 years of continuous service (except in case of death or disability).
- Works in a company that has 10 or more employees.
- Leaves due to retirement, resignation, termination, or death.
Is Gratuity Taxable?
Gratuity received by an employee is partially or fully exempt from income tax under Section 10(10) of the Income Tax Act. The exemption limit depends on the type of employment:
- Government employees: Fully tax-exempt.
- Non-government employees covered under the Act: Exempt up to ₹20 lakhs (as of 2025).
- Non-government employees not covered: Exemption calculated differently based on last salary, tenure, etc.
Any amount over the exemption limit is taxable as per the individual's tax slab.
Gratuity in Case of Death or Disability
In the event of the employee's death or permanent disability, gratuity is payable regardless of service duration. Nominees or legal heirs are entitled to receive the amount.
Gratuity in Government vs Private Sector Jobs
In government jobs, gratuity is typically part of the retirement benefits package and is fully exempt from tax. In private sector jobs, gratuity must be paid if the organization has 10 or more employees, but tax exemptions and caps apply.
Why Use an Online Gratuity Calculator?
- Get accurate estimation of gratuity amount instantly.
- Plan retirement benefits or resignation payout smartly.
- Understand the impact of tax exemptions on total receivable.
- Compare scenarios for salary increments or longer tenure.