Calculate your gratuity in seconds using the official Payment of Gratuity Act formula — with the 5-year rule and the ₹20 lakh tax-free limit built in.
For establishments covered by the Payment of Gratuity Act 1972 (10 or more employees), the formula is:
| Component | Value |
|---|---|
| Gratuity | (15 × last salary × years) ÷ 26 |
| Salary | Basic + Dearness Allowance |
| Rounding | 6 months or more = 1 full year |
| Tax-free limit | ₹20,00,000 |
Ravi earns ₹60,000 (basic + DA) and has worked 12 years and 7 months.
Years counted = 13 (7 months rounds up). Gratuity = (15 × 60,000 × 13) ÷ 26 = ₹4,50,000, fully tax-free as it is under ₹20 lakh.
You qualify after five years of continuous service with an establishment covered by the Act. The five-year rule is waived if service ends due to death or disability. If your employer wrongly refuses gratuity, you can claim it before the Controlling Authority under the Act — and a lawyer can help.
For employees covered by the Payment of Gratuity Act, gratuity = (15 × last drawn monthly salary × completed years of service) ÷ 26. Salary means basic pay plus dearness allowance. Any service of six months or more in the final year counts as a full year.
It treats gratuity as 15 days of salary for every completed year. A month is taken as 26 working days, so 15/26 of your monthly salary is roughly 15 days' pay — multiplied by your years of service.
At a last drawn salary (basic + DA) of ₹50,000, ten years gives (15 × 50,000 × 10) ÷ 26 = ₹2,88,462. Change the numbers in the calculator above for your own figure.
Usually no — you need five years of continuous service. The only exceptions are if service ends due to death or disablement, when gratuity is payable regardless of years completed.
Gratuity is tax-free up to ₹20,00,000 for employees covered by the Act; any amount above that is taxable. Government employees get full exemption.
The maximum tax-exempt gratuity is ₹20 lakh. An employer can pay more, but the excess is taxable in your hands.
Yes. Gratuity is payable on resignation, retirement, or the end of employment, as long as you have completed five years of continuous service.
Many employers show a gratuity provision inside your CTC, but you only actually receive it when you leave after five years. It is not part of your monthly take-home pay.