Gratuity Calculator – Calculate Gratuity Amount Instantly

Gratuity is a lump-sum payment made 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 after a minimum of 5 years of continuous service.

For employees covered under the Act: Gratuity = (Basic Salary × 15 × Years) / 26. For non-covered employees: Gratuity = (Basic Salary × 15 × Years) / 30. The divisor 26 represents working days in a month excluding Sundays.

An employee must complete at least 5 years of continuous service with the same employer. In cases of death or disability, gratuity is paid irrespective of the service period.

For private sector employees, gratuity up to ₹20,00,000 is fully exempt from income tax. Any amount above ₹20 lakh is added to taxable income. Government employee gratuity is fully exempt.

Only the last drawn basic salary (and dearness allowance, if applicable) is considered. HRA, bonus, overtime, and other allowances are excluded from the gratuity formula.

The maximum gratuity payable under the Payment of Gratuity Act is ₹20,00,000. Employers can voluntarily pay more, but the tax exemption is capped at ₹20 lakh.

Employees in establishments with 10 or more workers are covered under the Act and use the /26 formula. Those in smaller establishments are not covered and the /30 formula applies.

Gratuity is paid when an employee leaves after 5 years of service — on resignation, retirement, death, or disability. The employer must pay within 30 days of the payment becoming due.