Gratuity Calculator – Calculate Your Gratuity Online (India)
Gratuity Amount
₹0
Eligibility Status
Eligible
Formula Used
Gratuity = (Basic + DA) × 15 × Years ÷ 26
What Is Gratuity and How Is It Calculated?
Gratuity is a statutory benefit paid by an employer to an employee as a token of appreciation for long and meritorious service. In India, it is governed by the Payment of Gratuity Act, 1972, which applies to establishments employing 10 or more people. To be eligible for gratuity, an employee must have completed at least five continuous years of service with the same employer, though exceptions exist in cases of death or disability.
The standard formula for calculating gratuity for employees covered under the Act is: Gratuity = Last Drawn Salary (Basic + Dearness Allowance) multiplied by 15, multiplied by the number of years of service, divided by 26. Here, 15 represents 15 days of wages, and 26 is the number of working days in a month. If the employee has worked for more than six months in the last year of service, it is rounded up to the next full year. The current maximum gratuity payable under the Act is capped at ₹25,00,000 (twenty-five lakh rupees).
Gratuity received is exempt from income tax up to ₹20,00,000 for employees covered under the Act. For government employees, the entire gratuity amount is tax-free. Use this calculator to quickly determine the gratuity you are entitled to based on your last drawn salary and years of service. Planning ahead helps ensure a smooth financial transition when changing jobs or retiring.
Frequently Asked Questions
What is gratuity?
Gratuity is a statutory benefit paid by an employer to an employee as a token of appreciation for long and meritorious service. In India, it is governed by the Payment of Gratuity Act, 1972, and is calculated based on the employee's last drawn salary and years of service.
Who is eligible for gratuity?
To be eligible for gratuity under the Payment of Gratuity Act, an employee must have completed at least five continuous years of service with the same employer. However, exceptions exist in cases of death or disability, where the five-year requirement is waived.
What is the maximum gratuity amount?
The current maximum gratuity payable under the Payment of Gratuity Act, 1972 is capped at ₹25,00,000 (twenty-five lakh rupees). Any calculated amount exceeding this cap will be limited to this maximum.
Is gratuity taxable?
Gratuity received is exempt from income tax up to ₹20,00,000 for employees covered under the Act. For government employees, the entire gratuity amount is tax-free. Any amount exceeding the exemption limit is taxable as per the individual's income tax slab.