Gratuity Calculator Online – Calculate Gratuity & Tax Exemption

Calculate your eligible gratuity amount and tax exemptions under the Payment of Gratuity Act.

₹
₹5K₹10L
Years
1 Yr50 Yrs

* Covered organisations are companies with 10 or more employees. They use a 26-day month base. Non-covered organisations use a 30-day base.

Tax-Exempt Gratuity₹ 144,231
Taxable Gratuity (Above 20L)₹ 0
Total Est. Gratuity₹ 144,231

What is Gratuity?

Gratuity is a statutory monetary benefit provided by employers to employees who have completed at least five years of continuous service with an organization. Defined under the Payment of Gratuity Act, 1972 in India, it is a form of pension/retirement package offered as a token of appreciation for long-term dedication.

Gratuity Calculation Formula

Depending on whether the organization falls under the scope of the Act, there are two formulas:

  • Under Gratuity Act:Gratuity = (Last Drawn Basic Salary + Dearness Allowance) × 15 × Years of Service ÷ 26. The denominator 26 accounts for four weekly holidays in a month.
  • Not Under Gratuity Act:Gratuity = (Last Drawn Basic Salary + Dearness Allowance) × 15 × Years of Service ÷ 30. The denominator 30 accounts for a standard monthly calendar cycle.

Important Exemption Thresholds

As per the latest Indian Income Tax directives, gratuity received is tax-exempt up to a lifetime ceiling of ₹20 Lakhs for private-sector employees. Any gratuity received in excess of ₹20,00,000 is categorized as taxable salary income. Central and state government employees receive 100% tax exemption on all gratuity receipts.

Frequently Asked Questions

Gratuity is a financial benefit given by an employer to an employee in appreciation of their long and continuous service to the organization, usually payable at retirement, resignation, or termination.
Under the Payment of Gratuity Act, 1972, any employee who has rendered continuous service for 5 years or more with a single employer is eligible to receive gratuity.
For employees covered under the Payment of Gratuity Act, 1972, the formula is: (Last Drawn Basic Salary + DA) × 15 × Years of Service ÷ 26.
For organizations not covered under the Act, the formula is: (Last Drawn Basic Salary + DA) × 15 × Years of Service ÷ 30.
Yes. The maximum tax-exempt limit for gratuity received by private sector employees under the Act is currently ₹20 Lakhs. Any amount received in excess of this statutory limit is taxable.

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