Gratuity Calculator

Gratuity is a lump-sum retirement benefit paid by an employer to an employee in recognition of long and continuous service. Under the Payment of Gratuity Act, 1972, it applies to all establishments with 10+ employees. Employees who have completed 5 or more years of continuous service are eligible upon resignation, retirement, or superannuation. Death and disability cases are exempt from the 5-year requirement.

5 years of continuous service for resignation or retirement. The 6-month rule applies: 4 years 7 months counts as 5 years (eligible); 4 years 5 months stays at 4 years (not eligible). For death or disability, there is no minimum — gratuity is payable from day one of employment.

Formula: (Last Drawn Basic + DA) × 15 × Rounded Years / 26. The 15 represents 15 days' wages per year of service; 26 is the number of working days in a month. Years are rounded using the 6-month rule. Example: ₹50,000 Basic, 10 years = (50,000 × 15 × 10) / 26 = ₹2,88,461. Capped at ₹20,00,000.

Formula: (Average of last 10 months Basic + DA + Commission) × 15 × Fully Completed Years / 30. Key differences: salary is averaged over 10 months, divisor is 30 instead of 26, and no 6-month rounding applies — only fully completed years count. The ₹20,00,000 cap still applies.

Under the Payment of Gratuity Act, if an employee has served 6 or more months in the final year, it counts as a full additional year. Less than 6 months is ignored. Examples: 7y 6m → 8 years; 7y 7m → 8 years; 7y 5m → 7 years. This rule applies only to Act-covered employees, not to the non-covered formula.

Government employees: fully tax-exempt. Private sector: the exempt amount is the least of — (1) actual gratuity received, (2) ₹20,00,000 cumulative lifetime cap minus any prior gratuity, (3) (Last Salary × 15 × Years) / 26. Any excess over the exempt amount is added to your income and taxed at applicable slab rates. Always report gratuity in your ITR under "Salary".

The statutory maximum under the Payment of Gratuity Act is ₹20,00,000 (₹20 Lakhs). This is also the cumulative lifetime tax-free limit under Section 10(10). If your computed gratuity exceeds ₹20L, the Act requires payment of exactly ₹20L. However, employers can voluntarily pay more as ex-gratia — the excess is fully taxable.

No, not under the Payment of Gratuity Act. You must complete 5 continuous years. The only exceptions are death and total disability, where gratuity is payable regardless of duration. Some employers voluntarily pay ex-gratia for shorter service — this is not mandatory and is at the employer's discretion. Always check your employment contract for such clauses.

Death and disability gratuity uses multiplier slabs: under 1 year = 2× basic; 1–5 years = 6×; 5–11 years = 12×; 11–20 years = 20×; 20+ years = half month salary per completed 6-month period up to a maximum of 33×. Example: 3 years service, ₹50,000 basic → 6 × 50,000 = ₹3,00,000. No 5-year minimum applies.

Yes. Under the Payment of Gratuity Act, continuous service includes periods of illness, accident, leave with pay, maternity leave, temporary lay-off by employer, and the notice period actually served. Authorized strike periods also count if the employee returns post-strike. Unauthorized absence, however, breaks the continuity of service and does not count.