Gratuity Calculator
Calculate the gratuity amount you are eligible for based on your salary and years of service.
Understanding Gratuity in India
Gratuity is a monetary benefit given by an employer to an employee for the services rendered to the organization. It is a token of appreciation for the employee's contribution over the years.
Eligibility for Gratuity
Minimum Service Period
An employee must have completed at least 5 years of continuous service with the employer.
Applicable Organizations
The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons.
Special Cases
In case of death or disablement, the 5-year condition is waived off.
Gratuity Calculation Formula
The formula for calculating gratuity is:
Gratuity = (Last Drawn Salary × 15/26 × Years of Service)
Where:
- Last Drawn Salary = Basic Salary + Dearness Allowance
- 15/26 represents 15 days out of the 26 working days in a month
- Years of Service is rounded down to the nearest full year
Taxation of Gratuity
For Government Employees
Gratuity received by government employees is fully exempt from income tax.
For Employees Covered Under the Gratuity Act
Gratuity is exempt from tax up to the least of the following:
- Actual gratuity received
- ₹20,00,000 (current limit)
- 15 days' salary based on last drawn salary for each completed year of service
For Other Employees
For employees not covered under the Gratuity Act, the exemption is the least of:
- Actual gratuity received
- ₹20,00,000 (current limit)
- Half month's salary for each completed year of service
Important Points to Note
- Gratuity is calculated based on the last drawn salary before retirement/resignation
- The maximum gratuity limit exempt from tax has been increased from ₹10,00,000 to ₹20,00,000 w.e.f. 29th March 2018
- For calculating gratuity, a month is considered to have 26 working days
- Service period of more than 6 months is considered as one year
- Gratuity can be received only once from an employer
- Gratuity amount exceeding the exempt limit is taxable as "Income from Salary"
How to Use This Calculator
- Enter your basic salary and dearness allowance (if applicable)
- Select your employment type (government, private covered under Gratuity Act, or other)
- Enter your total years of service
- The calculator will instantly show your eligible gratuity amount and tax implications
Disclaimer
This calculator provides an estimate based on the information you provide and the current gratuity rules. Actual gratuity amounts may vary based on your employment contract, company policies, and any changes in legislation. Please consult with a financial advisor or your HR department for the most accurate information.