Gratuity Calculator

How to Use the Gratuity Calculator

Enter your last drawn monthly basic salary (including Dearness Allowance) and your total years of service. The calculator will compute your gratuity, show the tax-exempt portion and the taxable amount.

What Is Gratuity?

Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered. Under the Payment of Gratuity Act, 1972, it is mandatory for establishments with 10 or more employees. You become eligible after completing 5 years of continuous service (4 years and 240 days is sometimes considered).

Gratuity Formula

For employees covered under the Payment of Gratuity Act:

Gratuity = (Last Drawn Basic + DA) × 15 × Years of Service ÷ 26

• 15 represents 15 days' wages for each year of service.
• 26 represents the working days in a month (excluding 4 Sundays).
• Service of more than 6 months in the last year is rounded up to the next full year.

Tax Treatment of Gratuity

• Government employees: Gratuity is fully exempt from tax.
• Private employees (covered under Act): Exempt up to the least of — (a) actual gratuity received, (b) ₹20,00,000, or (c) 15 days' salary × years of service.
• Any amount exceeding the exemption limit is taxable as "Income from Salary".

Tips & Related Calculators

• Gratuity is separate from your EPF balance — you receive both at retirement or resignation.
• Use the Salary Calculator to understand your full CTC breakdown.
• Plan your retirement corpus with the NPS Calculator.

Frequently Asked Questions