Gratuity Calculator
Calculate your gratuity amount based on last drawn salary and years of service under the Payment of Gratuity Act.
Gratuity Amount
₹2.02 L
Tax-Free
₹2.02 L
Taxable
₹0
How it's calculated
Gratuity = (Basic + DA) × 15 × Years of Service ÷ 26
= ₹50,000 × 15 × 7 ÷ 26 = ₹2.02 L
Tax-free limit: ₹20.00 L (under Payment of Gratuity Act). The 26 represents working days in a month.
About the Gratuity Calculator
Gratuity is a statutory reward for loyalty - if you have worked at the same employer for at least 5 years, you are legally entitled to gratuity under the Payment of Gratuity Act, 1972. It is calculated at 15 days of salary per year of service. For a 10-year employee with a ₹60,000 basic salary, this means ₹3.46 lakh - completely tax-free up to ₹20 lakh. Many employees do not know their entitlement until they are about to leave.
Gratuity Calculation
Gratuity = (Basic Salary + DA) × 15 × Years of Service / 26
15 = days of salary per completed year · 26 = working days in a month · Years of service rounded to nearest half-year · Maximum tax-free gratuity: ₹20,00,000 · If service > 6 months, rounded up to next year
Worked Example
Employee with 12 years 8 months service, Basic + DA ₹75,000/month
Gratuity = ₹75,000 × 15 × 13 / 26 = ₹5,62,500 · Fully tax-free (under ₹20L limit)
Tips & Insights
- 1
Service of 6 months or more in the last year counts as a full year for gratuity calculation.
- 2
Gratuity is payable within 30 days of leaving. If delayed, the employer must pay interest.
- 3
Death or disability entitles family members to gratuity regardless of years served.
- 4
Gratuity is part of your CTC but typically not shown as a cash component - it is a future obligation by your employer.
- 5
The ₹20 lakh tax-free limit applies per employer. If you get gratuity from multiple employers, each is capped separately.
- 6
For non-Act establishments (fewer than 10 employees), gratuity = Basic × 15 × years / 30 (30 days, not 26).
Why this matters for you
Gratuity is often forgotten in job-change calculations. Leaving after 4.5 years instead of 5 years means losing the entire gratuity entitlement. For a senior employee earning ₹1L basic with 10+ years of service, this can be ₹5-8 lakh walking out the door unclaimed. Knowing your gratuity amount helps you make better decisions about timing a resignation.
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