Gratuity Calculator
Calculate gratuity amount as per Payment of Gratuity Act 1972 Auto Calculate
Gratuity Calculation Results
Total Service Period
10 Years 0 Months
Last Drawn Salary
₹ 50,000
Gratuity Per Year
₹ 29,167
Total Gratuity
₹ 2,91,667
Calculation Formula:
(Last Drawn Salary × 15 × Years of Service) ÷ 26
For employees covered under Gratuity Act
(Last Drawn Salary × 15 × Years of Service) ÷ 26
For employees covered under Gratuity Act
About Gratuity Calculation
What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for the services rendered. It is governed by the Payment of Gratuity Act, 1972.
How Gratuity is Calculated:
1
Determine Last Drawn Salary
Last drawn salary = Basic Salary + Dearness Allowance (DA)
Last drawn salary = Basic Salary + Dearness Allowance (DA)
2
Calculate Total Service Period
• 6+ months = Count as full year
• Less than 6 months = Ignore
• 6+ months = Count as full year
• Less than 6 months = Ignore
3
Apply Formula
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
Gratuity Eligibility & Rules
| Employee Type | Eligibility | Formula | Maximum Limit |
|---|---|---|---|
| Covered under Act | 5+ years service | (Salary × 15 × Years) ÷ 26 | ₹20 lakhs |
| Not Covered | 5+ years service | Half month's salary × Years | No limit |
| Government | 5+ years service | Last salary × Years × ½ | ₹20 lakhs |
Important Legal Notes:
- Minimum 5 years continuous service required
- Maximum gratuity limit is ₹20 lakhs (as per latest amendments)
- Tax exemption available under Section 10(10) of Income Tax Act
- Payable on resignation, retirement, termination, death, or disability
- Not payable if terminated for misconduct
Tax Implications
Gratuity received by government employees is fully tax-exempt. For private employees:
- Least of the following is exempt: Actual gratuity, ₹20 lakhs, 15 days' salary × years
- Balance amount is taxable as "Income from Salary"
- Form 10C needed for exemption claim