Gratuity Calculator — India (₹)

Calculate gratuity amount as per the Payment of Gratuity Act 1972. Check eligibility after 5 years, tax-free limit of ₹20 lakh, and projection by years of service.

🎖️ Your Details
Include Basic Salary + Dearness Allowance only
Minimum 5 continuous years required for eligibility
📜 Gratuity RulesFormula (Covered): (Salary × 15/26) × Years
Formula (Not Covered): (Salary × 15/30) × Years
Tax-free limit: ₹20,00,000
Gratuity is payable on retirement, resignation, death, or disablement after 5+ years
Gratuity Amount₹1,44,231
Tax-Free Amount₹1,44,231
Taxable Amount₹0 (Fully Exempt)
Monthly Salary (Basic+DA)₹50,000
📅 Gratuity Projection by Years
YearsGratuityStatus
1 years—❌ Not Eligible
2 years—❌ Not Eligible
3 years—❌ Not Eligible
4 years—❌ Not Eligible
5 years₹1,44,231✅ Fully Exempt
8 years₹2,30,769✅ Fully Exempt
10 years₹2,88,462✅ Fully Exempt
15 years₹4,32,692✅ Fully Exempt
20 years₹5,76,923✅ Fully Exempt
25 years₹7,21,154✅ Fully Exempt
30 years₹8,65,385✅ Fully Exempt

What is Gratuity in India?

Gratuity is a lump-sum payment made by an employer to an employee as recognition for long service and contribution to the organisation. It is governed by the Payment of Gratuity Act, 1972 and is mandatory for organisations with 10 or more employees. Gratuity is payable upon retirement, resignation after 5 years, termination, death, or permanent disablement.

The gratuity calculation uses the formula: (Last Basic+DA × 15/26) × Years of Service. The 15 represents 15 days, and 26 represents working days in a month (excluding Sundays). The maximum tax-free gratuity is ₹20 lakh for private sector employees — amounts above this are taxable as per the applicable income tax slab.

How to Use This Gratuity Calculator

  • Last Drawn Salary (Basic + DA): Enter your last monthly Basic Salary + Dearness Allowance. This does NOT include HRA, special allowance, bonuses, or perquisites — only Basic + DA.
  • Years of Service: Enter total completed years. Note: service periods of 6 months or more in the last year are rounded up. For example, 7 years and 8 months counts as 8 years for gratuity purposes in many courts.
  • Organisation Type: Select "Covered" if your organisation has 10 or more employees (uses 15/26 formula). Select "Not Covered" for smaller organisations (uses 15/30 formula — lower payout).
  • Projection table: See gratuity at different service milestones to understand how your payout grows with each additional year.

Key Factors That Affect Gratuity in India

  • Basic + DA (not CTC): Gratuity is computed on Basic+DA only — not gross salary or CTC. Many companies keep Basic low in CTC structures (30–40% of CTC), which significantly reduces gratuity payouts. A ₹1L/month CTC employee with ₹30,000 Basic gets far less gratuity than one with ₹50,000 Basic.
  • Service Duration: The 5-year eligibility threshold is critical. One day short of 5 years means zero gratuity. Every additional year after 5 adds approximately 15 days' salary to the payout.
  • Tax-free Cap: The ₹20 lakh tax-free limit is for lifetime — if you receive gratuity from multiple employers, the exemption applies cumulatively. Once ₹20L is exhausted across careers, additional gratuity is fully taxable.
  • 4 years + 240 days rule: In organisations with a 6-day working week (where 240 working days = 1 year), completing 4 years and 240 days may be treated as 5 years for gratuity purposes — confirmed by several High Court rulings.

Tips to Maximise Your Gratuity in India

  • Never leave before 5 years without checking the 240-day rule: If you're close to the 5-year mark, consult HR about whether 4 years + 240 working days qualifies at your organisation. Leaving even a few weeks early can mean losing lakhs in gratuity.
  • Negotiate a higher Basic salary component: When joining or during appraisals, negotiate to increase the Basic component as a percentage of CTC. Higher Basic means higher gratuity, higher EPF contributions, and better HRA exemption.
  • Understand the Act coverage: If your employer has fewer than 10 employees, the Gratuity Act may not apply, but many employers voluntarily pay gratuity. Clarify this at the time of joining.
  • Claim promptly after separation: Submit your gratuity claim (Form I) to your employer within 30 days of separation. The employer must pay within 30 days. Delays beyond this attract interest. For disputes, file a complaint with the Controlling Authority (Labour Commissioner) under the Act.

Disclaimer: Gratuity calculations are based on the Payment of Gratuity Act, 1972 formula. Actual gratuity may vary based on company policy, collective bargaining agreements, or court rulings on the 240-day rule. Consult your HR or legal advisor for specific cases.