Gratuity Calculator India
Estimate your gratuity under the Payment of Gratuity Act, 1972. Uses last drawn basic and completed years of service, capped at ₹20 lakh.
Gratuity is 15 days of salary for every completed year of service, calculated as (last drawn basic × 15 × years) / 26. The tax-exempt amount is capped at ₹20 lakh under Section 10(10).
Gratuity is a lump sum paid by the employer when an employee leaves after at least five years of continuous service. It is governed by the Payment of Gratuity Act, 1972.
The formula uses the last drawn basic salary and the number of completed years of service. Service above six months in the last year is counted as a full year; below six months is ignored. The amount is tax-exempt up to ₹20 lakh.
How the calculation works
- Eligibility: at least five years of continuous service, except on death or disablement.
- Formula: (last drawn basic × 15 × completed years) / 26.
- Ceiling: the tax-exempt gratuity is capped at ₹20 lakh.
Worked example
An employee with a last drawn basic of ₹25,000 and 7 completed years gets (25,000 × 15 × 7) / 26 = ₹1,01,923. This is below the ₹20 lakh cap, so the full amount is tax-exempt.
Frequently asked questions
- Is gratuity taxable?
- Gratuity is tax-exempt up to ₹20 lakh under Section 10(10) of the Income Tax Act. Any amount above that is taxable.
- Do I need to complete 5 years to get gratuity?
- Yes, in general. The rule does not apply if employment terminates due to death or disablement.
- What is the 26 in the formula?
- The Act defines 26 working days in a month for gratuity calculation, excluding weekly-offs.