Gratuity Calculator India (2026)
Calculate your gratuity amount as per Payment of Gratuity Act, 1972. Tax-free retirement benefit.
Employment Details
Covered: Under Payment of Gratuity Act (10+ employees)
📋 Quick Info
- ⏰Minimum 5 years required
- 💰Maximum gratuity ₹20 lakh
- 🛡️Tax-free up to ₹20 lakh
💡 Smart Insights
Personalized gratuity analysis
Working 1 more year = +₹28,846
Your gratuity increases from ₹2,88,462 to ₹3,17,308 with just 1 extra year.
10% salary hike = +₹28,846 gratuity
If your salary increases to ₹55,000, your gratuity jumps to ₹3,17,308.
📋 Quick Info
- ⏰Minimum 5 years required
- 💰Maximum gratuity ₹20 lakh
- 🛡️Tax-free up to ₹20 lakh
Important Disclaimer
This calculator provides estimates based on the Payment of Gratuity Act, 1972. Actual gratuity may vary based on employer policies and applicable rules. Consult your HR department for exact figures.
Real Example
For a salary of ₹50,000 and 10 years of service:
This ₹2.88 lakh is completely tax-free — a significant retirement benefit!
Gratuity Formula
The math behind your benefit
Gratuity = (Salary × 15 × Years) / 26What is Gratuity?
Gratuity is a lump sum amount paid by an employer to an employee as a token of appreciation for services rendered. It is governed by the Payment of Gratuity Act, 1972 and is payable on retirement, resignation, superannuation, death, or disability.
It's one of the key retirement benefits in India and applies to establishments with 10 or more employees. The amount is completely tax-free up to ₹20 lakh, making it a significant component of retirement planning.
Gratuity Eligibility Rules
Minimum Service Period
5 years of continuous service is mandatory for gratuity eligibility.
Exception — Death/Disability
The 5-year rule does NOT apply in case of death or disability of the employee.
Rounding Rule
If service exceeds 6 months in the last year, it is rounded up to the next full year.
Maximum Limit
Maximum gratuity payable is capped at ₹20 lakh under the Act.
Gratuity Calculation Formula
Covered under Gratuity Act (÷26)
Gratuity = (Salary × 15 × Years) / 26Applies to employees in establishments with 10+ employees.
Not Covered under Act (÷30)
Gratuity = (Salary × 15 × Years) / 30For employees not covered under the Payment of Gratuity Act.
Gratuity Tax Rules
Government Employees
Entire gratuity received is completely exempt from income tax.
Private Sector (Covered)
Tax-free up to ₹20 lakh. Amount exceeding ₹20 lakh is taxable as per income slab.
Private Sector (Not Covered)
Exemption is the least of: (a) actual gratuity, (b) ₹20 lakh, or (c) half month salary × years of service.
Quick Facts About Gratuity
Min 5 Years
Continuous service required (except death/disability).
Max ₹20 Lakh
Upper limit under the Gratuity Act.
Tax Free
Exempt up to ₹20 lakh under Income Tax Act.
Salary = Basic + DA
Excludes HRA, bonus, and other allowances.
Rounding Rule
>6 months = next year, ≤6 months = ignore.
Legal Right
Cannot be denied if eligibility criteria met.
Frequently Asked Questions
What is the gratuity formula?
Gratuity = (Last Salary × 15 × Years of Service) / 26 for employees covered under the Payment of Gratuity Act. For non-covered employees, the divisor is 30.
Is gratuity taxable in India?
Gratuity up to ₹20 lakh is completely tax-free. Any amount exceeding ₹20 lakh is taxable as per the individual's income tax slab.
Can I get gratuity before 5 years?
No, minimum 5 years of continuous service is required. Exception: Death or disability of the employee — the 5-year rule does not apply.
What salary is used for gratuity?
Only Basic Salary + Dearness Allowance (DA) is considered. Other components like HRA, bonus, overtime, etc., are excluded.
Is gratuity applicable on resignation?
Yes, gratuity is payable on resignation provided you have completed 5 years of continuous service.
What is the ₹20 lakh gratuity cap?
Under the Payment of Gratuity Act, the maximum gratuity payable is capped at ₹20 lakh. Employers can pay more voluntarily.
How is service period rounded?
If you have worked more than 6 months in the last year, it's rounded up to the next full year. If ≤6 months, the fraction is ignored.
Can employer deny gratuity?
Gratuity can be partially or fully forfeited only if the employee is terminated for criminal offence or moral turpitude. Otherwise, it is a legal right.
Other Employment Calculators
Plan Your Retirement with Gratuity!
Gratuity is a significant part of your retirement corpus. Use this tool to plan ahead and maximize your benefits.
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Last Updated: 31 May 2026