Gratuity Calculator
Calculate your gratuity payout instantly. Enter last drawn basic salary and years of service — supports both Government Act-covered employers (10+ employees) and non-covered organisations.
Employment Details
Employer Type
Gratuity per year of service: ₹28,846
Additional Months (6+ months rounds up to 1 year)
Gratuity Amount
₹2.88 Lakh
10 yr service · 15/26 formula
Calculation Breakdown
Key Rules
- Minimum 5 years service required (waived for death/disability)
- Payable within 30 days of separation
- Tax-free up to ₹20 lakh (private sector)
- 6+ months in last year = full extra year counted
How It Works
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for their long service, paid at retirement, resignation (after 5 years), or death/disability. The Payment of Gratuity Act, 1972 applies to establishments with 10 or more employees. For covered employees, the formula uses 15/26 (15 days' salary per year, with 26 working days per month). For non-covered employees, the formula uses 15/30. Years of service are rounded: 6 months or more in the last year counts as a full year. The tax-free gratuity limit is ₹20 lakh (raised in 2019); anything above is taxable as salary income.
Gratuity Formula
Covered (Gratuity Act): Gratuity = (Last Basic + DA) × 15/26 × Years of service. Non-covered: Gratuity = (Last Basic + DA) × 15/30 × Years of service. Max tax-free: ₹20 lakh.
Example (Covered): Basic + DA = ₹50,000/month, 10 years 7 months. Months ≥ 6 → rounds to 11 years. Gratuity = 50,000 × 15 × 11 ÷ 26 = ₹3,17,308.
Example (Non-Covered): Same inputs but 15/30 formula → 50,000 × 15 × 11 ÷ 30 = ₹2,75,000. Both are fully tax-free (below ₹20L).
Quick Reference
- Minimum service
- 5 years (waived on death/disability)
- Covered formula
- Basic+DA × 15/26 × years
- Non-covered formula
- Basic+DA × 15/30 × years
- Tax-free limit
- ₹20 lakh (private sector)
- Payment deadline
- Within 30 days of separation
Frequently Asked Questions
Who is eligible for gratuity?
An employee is eligible for gratuity after completing a minimum of 5 continuous years of service with the same employer. The 5-year rule is waived in case of death or total disability — gratuity is payable regardless of years served. Part-time and contract employees may also be eligible depending on court interpretations.
What is the difference between covered and non-covered gratuity?
Covered employees work in organisations with 10 or more employees (Payment of Gratuity Act applies). Their gratuity uses 15/26 formula — 15 days' salary assuming 26 working days/month. Non-covered employees work in smaller organisations; the formula uses 15/30 — 15 days' salary based on 30-day months. This results in a slightly lower payout for non-covered employees.
Is gratuity taxable?
For government employees: fully exempt. For private sector covered employees: exempt up to ₹20 lakh (or actual gratuity received or 15/26 × last salary × years — whichever is least). For non-covered employees: exempt up to ₹20 lakh or half month's average salary per year (whichever is lower). Any amount above the exempt limit is added to income and taxed per slab.
Is basic salary or CTC used for gratuity?
Gratuity is calculated on Basic Salary + Dearness Allowance (DA). CTC, HRA, special allowances, or PF contributions are not included. Typically, for private sector employees without DA, the gratuity base is just the basic salary component of your salary slip.
When must gratuity be paid?
Gratuity must be paid within 30 days of it becoming due (i.e., from the date of resignation, retirement, or other separation). If payment is delayed, the employer must pay simple interest at the rate specified by the government. Failure to pay can attract penalties under the Gratuity Act.
Can gratuity be forfeited?
Yes, gratuity can be partially or fully forfeited if the employee is dismissed for misconduct causing financial loss to the employer (to the extent of loss), or for acts of violence, riotous behaviour, moral turpitude, or offences involving moral turpitude. However, the employee must be dismissed, not resigned.