Gratuity Calculator
Calculate your gratuity amount based on salary and years of service. Know the tax exemption limit and eligibility rules.
Calculate Gratuity
₹
Include Basic Salary + Dearness Allowance
Years
Months (0-11)
Effective Years (for calculation)0 years
Note: 6+ months in final year counts as 1 full year
Gratuity Rules
- Eligibility: Minimum 5 years of continuous service (4 years 6 months counts as 5 years)
- Formula: (Last Salary × 15 × Years of Service) ÷ 26
- Exemption: Up to ₹20 lakh is tax-free for private sector employees
- Government: Entire gratuity is tax-exempt for government employees
- Max Limit: Gratuity cannot exceed ₹20 lakh under the Gratuity Act
Understanding the Formula
Why 15? The Act considers 15 days wages for each year of service
Why 26? Number of working days in a month (30 days - 4 Sundays)
Last Salary: Includes Basic + Dearness Allowance (DA). Commission on turnover-based is included for covered employees.
Frequently Asked Questions
What is the gratuity formula?
The gratuity formula is: Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26. Here, Last Drawn Salary includes Basic Salary + Dearness Allowance. The factor 15 represents 15 days wages, and 26 represents working days in a month.
Who is eligible for gratuity?
Employees who have completed at least 5 years of continuous service are eligible for gratuity under the Payment of Gratuity Act, 1972. The 5-year requirement is waived in case of death or disability of the employee. The Act applies to establishments with 10 or more employees.
Is gratuity taxable?
For private sector employees covered under the Gratuity Act, gratuity up to ₹20 lakh is exempt from income tax. Any amount above ₹20 lakh is taxable as per your income tax slab. For government employees, the entire gratuity amount is tax-exempt.
What if I worked 4 years 8 months?
Under the Gratuity Act, if you have worked for more than 6 months in the final year, it is rounded up to a full year. So 4 years 8 months would be counted as 5 years, making you eligible for gratuity. Similarly, 4 years 5 months would not make you eligible.