Calculate your gratuity entitlement under the Payment of Gratuity Act 1972 - with tax-exempt limit and taxable portion breakdown.
Gratuity is payable only after completing at least 5 years of continuous service. Exception: death or disability - gratuity paid regardless of tenure.
Gratuity = (15 × Last salary × Years) ÷ 26. Where salary = Basic + DA, and years are rounded up if >6 months in the last year of service.
For employees covered under the Act: tax-free up to ₹20 lakh. For others: minimum of actual gratuity, ½ month salary × years, or ₹20L limit.
Employer must pay gratuity within 30 days of the last working day. Delayed payment attracts interest at the rate specified by the government.
Gratuity is a statutory retirement benefit payable by employers to employees who have completed at least five continuous years of service, governed by the Payment of Gratuity Act, 1972 (amended in 2018). The formula is: Gratuity = (Last drawn basic salary + DA) x 15/26 x number of years of service. The factor 15/26 represents 15 days of wages per year, computed on a 26-working-day month. This calculator applies the correct formula for both covered employees (factories, mines, oilfields, plantations, ports, railways, shops) and government employees, and shows the Income Tax Act, 1961 exemption limit.
The 2018 amendment raised the tax-free gratuity ceiling from Rs 10 lakh to Rs 20 lakh for employees covered under the Act. For government employees (Central and State), the ceiling is higher - Rs 25 lakh as of 2024. If an employee dies or suffers disability, the five-year minimum service requirement is waived. Employers must pay gratuity within 30 days of it becoming due; delay attracts simple interest at the rate prescribed by the government. The controlling authority for gratuity disputes is the Labour Commissioner of the respective state.
Employees approaching retirement, HR professionals processing full-and-final settlements, and finance teams computing payroll liabilities will find this tool useful. Enter your last drawn basic salary (plus DA), and total years of service to get an instant, accurate gratuity figure along with the taxable and tax-exempt portions.