💐 Gratuity Calculator

1. Enter your last drawn monthly salary (basic + dearness allowance) in rupees.
2. Enter your total years of service with the employer.
3. Enter additional months if you have a partial year of service.
4. Review your inputs to ensure they reflect your employment details.
5. Click Calculate to see the gratuity amount, tax-exempt amount and taxable amount.

What is gratuity and when am I eligible for it?

Gratuity is a lump-sum retirement benefit paid by the employer under the Payment of Gratuity Act, 1972. You become eligible after completing 5 years of continuous service with the same employer. An exception applies if you have completed 4 years and 240 days in the 5th year — courts have ruled this qualifies for gratuity. Gratuity is also payable on superannuation (retirement), resignation, death or disablement.

How is gratuity calculated in India?

Gratuity is calculated using the formula G = (Last Salary x 15/26) x Years of Service, where Last Salary is basic + dearness allowance, 15 represents 15 days of wages per year of service, and 26 represents the working days in a month. For employees covered by the Act, the formula uses the 15/26 factor. For employees not covered, the formula uses 15/30 instead.

Is gratuity taxable in India?

Gratuity received from employers covered by the Payment of Gratuity Act is tax-exempt up to Rs. 20 lakhs (increased from Rs. 10 lakhs in the 2019 amendment). Any amount above Rs. 20 lakhs is taxable as "salary" income. Government employees (central and state) receive fully tax-exempt gratuity. The Rs. 20 lakh exemption is a lifetime cap across all employers, not per employer.

What is the 4 years 240 days rule for gratuity?

Although the Payment of Gratuity Act requires 5 years of continuous service, courts have interpreted that an employee who has completed 4 years and 240 days in the 5th year is deemed to have completed 5 years of service and is therefore eligible for gratuity. The 240-day threshold is based on the legal definition of a working year.

Can I get gratuity if I resign before 5 years?

No, gratuity is generally not payable if you resign before completing 5 years of continuous service, unless you qualify under the 4-years-240-days exception. However, gratuity is payable in case of death or disablement regardless of the length of service — in such cases even an employee who has served less than 5 years is eligible.

What happens to my gratuity if I die in service?

If an employee dies in service, gratuity is paid to the nominee or legal heir, regardless of the length of service completed. The amount is calculated based on the last drawn salary and years of service, subject to a maximum of Rs. 20 lakhs for private-sector employees. Government employees have no upper cap on the tax-exempt amount.

How does the Rs. 20 lakh tax exemption work?

The Rs. 20 lakh tax exemption is a lifetime limit that applies to the total gratuity received from all employers covered by the Payment of Gratuity Act throughout your career. If you have already received tax-exempt gratuity from a previous employer, that amount reduces the available exemption for future gratuity payments. Any gratuity exceeding the available exemption is taxed as salary income.

Disclaimer: This gratuity calculator is provided for informational and educational purposes only and does not constitute financial, tax or legal advice. The calculation is based on the Payment of Gratuity Act, 1972, and the 2019 amendment. Individual circumstances may vary. Please consult your HR department or a qualified tax professional for advice specific to your situation.

This tool is for informational purposes only and does not constitute financial advice. Consult a qualified financial professional for advice specific to your situation.

Gratuity is a valuable retirement benefit, so it is important to understand the eligibility rules and calculation method to ensure you receive what you are entitled to. The key threshold is 5 years of continuous service — make sure you know that the 4-year-240-day rule can qualify you even if you have not completed a full 5 years. Keep track of your salary structure, because gratuity is calculated only on basic salary plus dearness allowance, not on your gross CTC. When changing jobs, check whether your employer offers gratuity as part of the retirement benefits package. The Rs. 20 lakh tax exemption limit (post-2019 amendment) applies to the total gratuity received over your entire career from all employers covered by the Act, not per employer — so if you have already received gratuity from a previous employer, that amount counts towards the lifetime limit. Government employees receive fully tax-exempt gratuity with no cap. For private-sector employees not covered by the Act, gratuity terms may differ and should be negotiated in the employment contract. Always nominate a beneficiary for your gratuity payment, as the amount is paid to the nominee in case of death. Use our salary calculator and income tax calculator to understand the full impact of gratuity on your overall compensation and tax planning.