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Gratuity Calculator

Calculate the gratuity payable on retirement or resignation under the Payment of Gratuity Act.

⚡ Quick answer

Under the Payment of Gratuity Act, gratuity is payable after 5 years of continuous service and is calculated as 15 days of last-drawn salary for every completed year of service — (15 × last salary × years) ÷ 26. This calculator works out the amount and flags anything above the ₹20 lakh tax-exempt limit.

How it’s calculated

  • Formula (Act-covered employees): Gratuity = (15 × last drawn monthly salary × years of service) ÷ 26, where salary = Basic + DA.
  • A period of service over 6 months in the final year is rounded up to a full year; 6 months or less is ignored.
  • Gratuity is tax-exempt up to ₹20,00,000 in a lifetime; any amount above that is taxable as salary.
  • Gratuity is generally payable only after 5 years of continuous service (except on death or disability).

Frequently asked questions

How is gratuity calculated?

For employees covered by the Payment of Gratuity Act, gratuity = (15 × last drawn salary × years of service) ÷ 26, where salary is Basic + DA. 15/26 represents 15 days out of a 26-day working month.

Is gratuity taxable?

Gratuity is exempt up to ₹20,00,000 over your lifetime. Any amount received above this cumulative limit is taxable under the head Salary.

After how many years is gratuity payable?

Gratuity is payable after 5 years of continuous service. This condition is waived if service ends due to death or disablement.

Is a year over 6 months rounded up?

Yes. If you have served more than 6 months in the final year, it is treated as a full year. 6 months or less is not counted.

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Gratuity Calculator

Over 6 months in the final year rounds up to a full year.
Years counted0
Gratuity payable₹0
Tax-exempt (up to ₹20L)₹0
Taxable portion₹0
Indicative estimate for general guidance only, based on current rules. Please confirm with a qualified Chartered Accountant before acting. Updated for FY 2025-26 (AY 2026-27).
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