Gratuity Calculator
Calculate your gratuity payout based on last salary and years of service under the Payment of Gratuity Act. The calculator also shows the tax-free exemption limit and any taxable amount.
Minimum 5 years required for gratuity eligibility.
What is Gratuity?
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for long and continuous service. Under the Payment of Gratuity Act, 1972, employees who have completed five or more years of continuous service are entitled to gratuity upon retirement, resignation, or death. The formula is Gratuity = (15 × Last Drawn Monthly Salary × Years of Service) / 26, where 26 represents the number of working days in a month.
Gratuity received from an employer covered under the Gratuity Act is tax-exempt up to ₹20 lakh under Section 10(10) of the Income Tax Act. Any amount above this limit is added to your income and taxed at the applicable slab rate. The "last drawn salary" for this formula includes Basic pay and Dearness Allowance (DA) only — other allowances such as HRA or conveyance are excluded.
Partial years of service are generally rounded to the nearest half year. For example, 10 years and 7 months rounds to 11 years, while 10 years and 4 months rounds to 10 years. Employers in certain sectors may calculate gratuity differently, so always verify with your HR department for the exact amount.
This calculator provides estimates based on the standard Payment of Gratuity Act formula. Actual gratuity may vary based on your employer's policy, sector-specific rules, or collective bargaining agreements. Consult your HR or a tax adviser for precise figures.