Gratuity Calculator
Calculate gratuity amount as per Payment of Gratuity Act 1972
Gratuity Details
Enter decimals for months, e.g. 5.6 = 5 years 7 months approx.
Enter service details and click Calculate
Gratuity is payable only after 5 years of continuous service. You may not be eligible yet.
Gratuity Amount
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Tax Exempt Portion
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Taxable Portion
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Calculation Details
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How to Use
- Enter your Last Drawn Basic + DA Salary (monthly). Gratuity is calculated on Basic + Dearness Allowance only, not gross salary.
- Enter Years of Service (decimals allowed, e.g., 6.8 years). Only completed years are counted (round down).
- Select Employee Type: Covered by Gratuity Act / Not Covered / Government Employee.
- Click Calculate to see gratuity amount, tax exemption, and taxable portion.
- A warning is shown if service is less than 5 years — gratuity is not payable below 5 years of continuous service.
What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a reward for long-term service, paid at retirement, resignation, death, or disablement. It is governed by the Payment of Gratuity Act, 1972 for organisations with 10+ employees.
Gratuity Formulas
| Employee Type | Formula | Maximum |
|---|---|---|
| Covered by Act | (Basic+DA × 15 × Completed Years) ÷ 26 | ₹20 lakh |
| Not Covered by Act | (Basic+DA × 15 × Completed Years) ÷ 30 | No limit (statutory) |
| Government Employee | Same as Covered by Act | ₹20 lakh |
Note: "26" = working days in a month (excluding Sundays). "30" = calendar days used for non-covered employees.
Gratuity Tax Exemption (Section 10(10))
| Employee Type | Exempt Amount |
|---|---|
| Government employee | Entire gratuity — fully exempt |
| Private (covered by Act) | Least of: Actual gratuity, 15 days salary per year, or ₹20 lakh |
| Private (not covered) | Least of: Actual gratuity, half month salary per year of service, or ₹10 lakh |
Key Rules
- Minimum service: 5 continuous years (except in case of death or disability).
- If the last year of service has more than 6 months, it counts as a full year (for covered employees).
- Gratuity must be paid within 30 days of it becoming due.
- An employer can pay more than the statutory gratuity — the excess is also tax-exempt if within the ₹20L limit overall.
Frequently Asked Questions
The Payment of Gratuity Act, 1972 applies to all establishments with 10 or more employees — factories, mines, oilfields, railways, ports, plantations, and shops/establishments. Once an employer crosses 10 employees, the Act applies permanently even if headcount later falls below 10. Private employers not covered by the Act can still pay gratuity voluntarily.
Non-payment of gratuity is a legal offence. You can: (1) Apply to the Controlling Authority (usually Assistant Labour Commissioner) in your area. (2) File a complaint with the Labour Commissioner's office. (3) The court can order the employer to pay gratuity with interest at 10% p.a. (4) Employers can face imprisonment up to 2 years and fines. Keep your employment records (salary slips, offer letter, appointment letter) for documentation.
Gratuity has a tax exemption under Section 10(10). Government employees: entire gratuity is exempt. Private employees (covered by Act): least of actual gratuity, 15-days salary per year of service, or ₹20 lakh is exempt. Not-covered employees: least of actual gratuity, half-month salary per year, or ₹10 lakh is exempt. Any amount above these limits is taxable as income. The ₹20 lakh limit was increased in the 2018 amendment.
No — gratuity is a separate statutory benefit. EPF is deducted from monthly salary; gratuity is a one-time payment at separation. Both are based on Basic + DA salary but are calculated and maintained separately. EPF is funded monthly (employee + employer contributions); gratuity is fully funded by the employer from their own pocket (not deducted from salary).