Gratuity Calculator
Calculate gratuity amount as per Indian Gratuity Act
Gratuity Calculation
Gratuity Calculator
Gratuity is a retirement benefit paid to employees under the Payment of Gratuity Act, 1972. It's calculated based on last drawn salary and years of service.
Formula
Last Salary = Basic + DA (Dearness Allowance). For organizations not covered under Act, denominator is 30 instead of 26.
Current Rates (2025)
Maximum Gratuity Limit
As per Payment of Gratuity Act, 1972 (amended)
Example Calculation
Scenario:
15 years of service, last drawn salary (Basic + DA) = ₹40,000
Calculation:
Gratuity = (15 × 40,000 × 15) / 26Result:
₹3,46,153.85
Key Points
- •Eligible after completing 5 years of continuous service
- •In case of death or disability, 5-year condition is waived
- •If service includes 6+ months in final year, round up to full year
- •Maximum gratuity capped at ₹20 lakh; excess treated as ex-gratia
- •Formula uses 26 (working days) for Act-covered organizations, 30 for others
Tax Implications:
- •Government employees: Entire gratuity is tax-exempt
- •Private sector (Act-covered): Exempt up to ₹20 lakh or eligible amount, whichever is less
- •Tax exemption calculated as minimum of: ₹20L, actual gratuity, or formula-based eligible amount
- •Taxable portion added to income and taxed at slab rates
- •Lifetime exemption limit of ₹20 lakh across all employments
Disclaimer: The calculations and information provided are estimates based on the inputs provided and current rates as of November 2025. Actual results may vary. Interest rates, tax laws, and regulations are subject to change. Please consult with a qualified financial advisor or tax professional for personalized advice.