Calculate gratuity amount as per Payment of Gratuity Act 1972
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Tax estimate based on the rules described on this page, not tax advice. Rules change every year, so confirm with a chartered accountant or the Income Tax Department before you file or plan. Terms of use
How to Use
- Enter your Last drawn basic + DA for a month. Gratuity is worked out on basic pay plus dearness allowance only, not your gross salary.
- Enter your Years of service. Decimals are fine (say 6.8 years). How part years count depends on the employee type: under the Gratuity Act, more than six months in the last year counts as a full year (6.8 becomes 7), if you aren't covered only completed years count (6.8 becomes 6), and for central government staff every completed six months counts.
- Pick your Employee type: private and covered by the Gratuity Act, private and not covered, or central government employee (worked out under the CCS Pension Rules).
- If your employer paid you a different amount, enter it in Gratuity actually received to see how much of it is tax-free and how much is taxable. Leave it at 0 otherwise.
- The gratuity amount, the tax-exempt and taxable parts, and the formula used update as you type.
- If your service is under 5 years, you'll see a warning: permanent employees need 5 years of continuous service, while fixed-term employees qualify after 1 year.
What is gratuity?
Gratuity is a lump sum your employer pays you as a thank-you for long service. It's paid when you retire, resign, or in case of death or disablement. The Payment of Gratuity Act, 1972 governs it for organisations with 10 or more employees. From 21 November 2025 these rules sit in the Code on Social Security, 2020, with the same formula. This gratuity calculator shows how much you'll get and how much of it is tax-free.
Gratuity formulas
| Employee Type | Formula | Maximum |
|---|---|---|
| Covered by Act | (Basic+DA × 15 × Years) ÷ 26, where a last part year of more than 6 months counts as a full year | ₹20 lakh |
| Not Covered by Act | (Basic+DA × 15 × Completed Years) ÷ 30, part years ignored | No statutory limit |
| Central Government Employee | (Basic+DA ÷ 4) × completed six-month periods | 16½ months' pay or ₹25 lakh, whichever is lower |
"26" is the number of working days in a month (Sundays left out). "30" is the calendar-day count used for employees not covered by the Act, so they get half a month's salary per year. The ₹25 lakh limit for central government staff applies from 1 January 2024 under the CCS (Pension) Rules. State government rules can differ.
So if your last basic + DA was ₹50,000 a month and you worked 10 full years at a company covered by the Act, your gratuity is ₹50,000 × 15 × 10 ÷ 26, or about ₹2,88,462.
Tax exemption on gratuity (Section 10(10))
| Employee Type | Exempt Amount |
|---|---|
| Government employee | The whole gratuity is exempt |
| Private (covered by Act) | Least of: Actual gratuity, 15 days' salary per year of service, or ₹20 lakh |
| Private (not covered) | Least of: Actual gratuity, half a month's salary (averaged over the last 10 months) per completed year of service, or ₹20 lakh |
Key rules
- You need at least 5 continuous years of service, except in case of death or disability.
- For covered employees, a last year of service longer than 6 months counts as a full year. If you aren't covered, only completed years count.
- Fixed-term employees can claim gratuity after one year of service under the Code on Social Security, 2020.
- Gratuity has to be paid within 30 days of becoming due.
- An employer can pay more than the statutory gratuity, but for private employees the extra is taxable. The ₹20 lakh tax-free limit covers your whole working life, across all employers.