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Gratuity Calculator India 2026 — Free Online
Calculate your exact gratuity payout under the Payment of Gratuity Act 1972. Enter your last drawn salary and years of service for an instant, accurate result.
Basic component from your last payslip only
Enter 0 if DA is not separately paid in CTC
Minimum 5 continuous years required
6+ months in last year rounds up to full year
Your Gratuity Amount
₹0
| Effective Service Years | — |
| Basic + DA (monthly) | — |
| Calculation Method | — |
| Gross Gratuity | — |
| Tax-Free Portion (up to ₹20L) | — |
| = Taxable Gratuity | — |
⚠️ Gratuity up to ₹20 lakh is fully tax-exempt for private sector employees under Section 10(10) of the Income Tax Act.
How to Use the Gratuity Calculator
- Enter your last drawn Basic Salary — Use the basic component from your final payslip, not your gross or CTC amount.
- Add Dearness Allowance — Common in government and PSU jobs. Most private sector employees can enter 0.
- Enter years and additional months of service — If additional months are 6 or more, the Act rounds up to the next full year.
- Select employment type — “Covered” means your employer has 10 or more employees. Otherwise choose “Not Covered.”
- Click Calculate — See your gratuity amount, tax-exempt portion, and any taxable gratuity instantly.
Gratuity Formula Under the Payment of Gratuity Act 1972
The Payment of Gratuity Act 1972 prescribes a formula based on your last drawn salary and completed years of service. The formula differs by employer coverage type.
For COVERED employees (10+ employee org):
Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service
Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service
For NOT COVERED employees:
Gratuity = (Basic + DA) × 15 ÷ 30 × Years of Service
Rounding Rule: If months in last year ≥ 6 → round up to next full year
Tax Exemption (Section 10(10), IT Act):
Private sector: Tax-free up to ₹20 Lakh
Government employees: Fully exempt (no limit)
📐 Formula validated by Vipul Jaganiya, Computer Science expert. Aligned with the Payment of Gratuity Act 1972 and Income Tax Act provisions for FY 2026-27.
Gratuity Calculation Examples
| Basic + DA | Years | Type | Gratuity | Tax Status |
|---|---|---|---|---|
| ₹30,000/mo | 7 yrs | Covered | ₹1,21,154 | ✅ Fully exempt |
| ₹50,000/mo | 10 yrs | Covered | ₹2,88,462 | ✅ Fully exempt |
| ₹1,00,000/mo | 15 yrs | Covered | ₹8,65,385 | ✅ Fully exempt |
| ₹2,00,000/mo | 25 yrs | Covered | ₹28,84,615 | ⚠️ ₹8,84,615 taxable (exceeds ₹20L cap) |
| ₹40,000/mo | 8 yrs | Not Covered | ₹1,60,000 | ✅ Fully exempt |
Frequently Asked Questions About Gratuity
What is the minimum service period to get gratuity?
You must complete a minimum of 5 years of continuous service with the same employer. The only exception is death or permanent disablement — gratuity is paid regardless of service years in those cases.
Is gratuity taxable in India?
Gratuity up to ₹20 lakh is fully tax-exempt for private sector employees (Section 10(10)). Government employees enjoy unlimited exemption. Any amount above ₹20L is taxed as salary income in the year received.
What is the gratuity formula for covered employees?
For employees covered under the Gratuity Act: Gratuity = (Basic + DA) × 15 / 26 × Years of service. The 26 represents average working days per month. For non-covered employees, 30 (calendar days) is used instead.
Can gratuity be paid before completing 5 years?
Generally no — gratuity requires 5 completed years. However, in cases of the employee’s death or permanent total disablement, gratuity is paid to the nominee/legal heir irrespective of service duration.
If I have 7 years and 7 months of service, do I get gratuity for 7 or 8 years?
For 8 years. Since 7 months ≥ 6 months in the last year, the Act rounds up to the next complete year. Had it been 5 months or fewer, it would stay at 7 years.
Does gratuity include HRA and other allowances?
No. Only Basic Salary and Dearness Allowance are included in the gratuity base. HRA, conveyance, medical, special allowance, LTA and all other components are excluded from the calculation.
What is the maximum gratuity an employer can pay?
There is no statutory upper limit on the gratuity amount an employer can pay. The tax-exempt ceiling is ₹20 lakh for private sector employees — amounts above that are taxable. Government employees are fully exempt regardless of amount.
Which organisations are covered under the Payment of Gratuity Act?
Any establishment (factory, mine, oilfield, plantation, port, railway, shop, or other) that employs 10 or more people on any day during the preceding 12 months. Once covered, it remains covered even if headcount drops below 10.
How soon must the employer pay gratuity after resignation?
The employer must pay gratuity within 30 days from the date it becomes payable. If payment is delayed beyond 30 days, the employer must pay simple interest on the amount for the delay period.
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