Gratuity Calculator
Calculate gratuity under the Payment of Gratuity Act 1972.
Gratuity is a lump-sum payment made by an employer to an employee as a token of gratitude for long years of service. In India, it is governed by the Payment of Gratuity Act, 1972 and is payable upon retirement, resignation after 5 years of service, death, or disablement. The gratuity calculator helps employees know how much they are entitled to receive and helps employers calculate the correct payable amount.
📋 How to Use This Calculator
Enter your monthly basic salary plus dearness allowance (the base for gratuity calculation), the number of years and months of continuous service, and whether your employer is covered under the Gratuity Act (organisations with 10 or more employees must comply). For Act-covered employers: Gratuity = (Basic + DA) ÷ 26 × 15 × years of service. For non-covered employers: Gratuity = (Basic + DA) ÷ 30 × 15 × years. Note: if service includes 6 or more months in the final year, it rounds up to the next full year for Act-covered employers.
💡 Key Facts & Information
The maximum tax-free gratuity amount is ₹20 lakh (revised from ₹10 lakh in 2019). Any amount above ₹20 lakh received by a private sector employee is taxable. Government employees' gratuity is fully exempt from tax. Gratuity is compulsorily funded — employers covered by the Act must have a gratuity trust or insurance policy. The minimum qualifying service for gratuity is 5 years of continuous service (except in case of death or disability, where it is payable from day one). The 26-day divisor (instead of 30) in the formula accounts for 4 weekly holidays per month, making the effective per-day salary slightly higher.