Gratuity Calculator
Compute the gratuity due when you leave a job after 5+ years of continuous service. Works for employees covered and not covered under the Payment of Gratuity Act, 1972.
Gratuity inputs
What is gratuity?
Gratuity is a one-time payment an employer gives an employee in recognition of long, continuous service — at retirement, resignation, termination (except for misconduct), or death/disablement. It is governed by the Payment of Gratuity Act, 1972.
Eligibility
- Minimum 5 years of continuous service with the same employer. (Exception: death or permanent disablement — gratuity payable regardless of tenure.)
- Employer must be a factory, mine, plantation, port, railway company, or any shop / establishment with 10+ employees on any day in the past 12 months.
The two formulas
For employees covered by the Act
Gratuity = (Last drawn salary × 15 × Years of service) / 26Where salary = basic pay + dearness allowance + commission (if % of turnover). 26 represents working days/month. 15 represents 15 days' pay per year of service.
For employees not covered
Gratuity = (Average salary × 15 × Years of service) / 30Use the average of the last 10 months' salary.
Tax treatment
- Government employees: Fully tax-exempt.
- Covered private employees: Least of (actual gratuity, ₹20L statutory cap, formula amount) is exempt under Section 10(10).
- Non-covered private employees: Least of (actual, ₹20L, half-month average salary × years) is exempt.
- The ₹20 lakh lifetime ceiling applies across all employers in your career.
Worked example
Priya works 12 years 8 months at a covered employer. Her last basic + DA is ₹80,000/month. Service rounds to 13 years. Gratuity = (80,000 × 15 × 13) / 26 = ₹6,00,000, fully tax-exempt.