Gratuity Calculator
Calculate your gratuity amount for private and government employees. Check eligibility, tax exemption, and formula breakdown.
Gratuity Amount
₹2,88,462
Tax-Exempt Amount
₹2,88,462
Formula Breakdown
(15 × Last Drawn Salary × Years) / 26
(15 × ₹50,000 × 10) / 26 = ₹2,88,462
₹20,00,000
What is Gratuity?
Gratuity is a lump-sum benefit paid by an employer to an employee as a token of appreciation for their long service. Under the Payment of Gratuity Act, 1972, employees who have completed at least 5 years of continuous service are eligible for gratuity. It is paid at the time of resignation, retirement, superannuation, or death/disablement of the employee.
How is Gratuity Calculated?
The gratuity formula depends on whether you work in the private sector or government:
- Private sector: Gratuity = (15 x Last Drawn Salary x Years of Service) / 26, where 26 represents the working days in a month
- Government: Gratuity = (15 x Last Drawn Salary x Years of Service) / 30, where 30 represents calendar days
"Last Drawn Salary" includes basic salary and dearness allowance. Years of service are rounded to the nearest integer — if you've worked more than 6 months in the last year, it's rounded up.
FAQ: Is gratuity taxable?
For government employees, gratuity is fully exempt from income tax. For private sector employees covered under the Payment of Gratuity Act, the least of the following is exempt: (1) actual gratuity received, (2) 15 days' salary for each completed year of service, or (3) ₹20,00,000. Any amount exceeding ₹20 lakh is taxable as per your income tax slab.
FAQ: What is the minimum service period for gratuity?
You need a minimum of 5 years of continuous service with the same employer to be eligible for gratuity. However, in case of death or disablement of the employee, the 5-year condition is relaxed. Some companies may also pay gratuity voluntarily even before the 5-year mark, though they are not legally required to.