Gratuity Calculator India
Calculate your gratuity amount under the Payment of Gratuity Act, 1972. Enter your last drawn salary (Basic + DA) and years of service for instant results.
What Is Gratuity?
Gratuity is a statutory benefit paid to employees by employers as a recognition of their long-term service. In India, it is governed by the Payment of Gratuity Act, 1972. It applies to factories, mines, oilfields, plantations, ports, railway companies, shops, and other establishments with 10 or more employees. An employee becomes eligible after completing 5 years of continuous service — though gratuity is payable even before 5 years in case of death or permanent disability.
Gratuity Calculation Formula
For employees covered under the Payment of Gratuity Act: Gratuity = (Last drawn salary × 15 × Years of service) ÷ 26. Here, "last drawn salary" means Basic Salary + Dearness Allowance (DA). The number 15 represents 15 days' wages per year of service, and 26 represents the number of working days in a month (since most months have 4 Sundays). For employees not covered under the Act, the formula is: Gratuity = (Last drawn salary × 15 × Years of service) ÷ 30.
Maximum Gratuity Amount — ₹20 Lakh Cap
As per the Payment of Gratuity (Amendment) Act, 2018, the maximum gratuity an employee can receive is ₹20,00,000 (₹20 lakh). If the calculated gratuity exceeds this limit, the employer is legally required to pay only ₹20 lakh. Any additional gratuity beyond this cap is at the employer's discretion and is called "ex-gratia."
Rounding of Service Years
Service of 6 months or more in the last year is rounded up to 1 full year. Service of less than 6 months in the last year is ignored. Example: 10 years and 7 months = 11 years for gratuity calculation. 10 years and 4 months = 10 years.
Is Gratuity Taxable?
Government employees: gratuity is fully exempt from income tax. Private sector employees (under the Gratuity Act): gratuity up to ₹20 lakh is tax-exempt. Any amount above ₹20 lakh is taxable as salary income. Employees not covered under the Act: the minimum of actual gratuity, ₹20 lakh, or half month's salary per year of service is exempt — whichever is least.