How is gratuity calculated?

For employees covered under the Payment of Gratuity Act: Gratuity = (Last Drawn Salary x 15 x Years of Service) / 26. Last drawn salary includes Basic + DA. For non-covered employees: Gratuity = (Last Drawn Salary x 15 x Years of Service) / 30.

Who is eligible for gratuity?

An employee is eligible for gratuity after completing 5 years of continuous service with the same employer. In case of death or disability, the 5-year requirement is waived.

For government employees, gratuity is fully exempt from tax. For private employees covered under the Gratuity Act, exemption is limited to the least of: actual gratuity received, 20 lakhs, or the gratuity calculated using the formula.

Gratuity Calculator — Calculate Gratuity Amount Online Free

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Gratuity Estimate

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Gratuity Calculation Breakup

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What is Gratuity?

Gratuity is a lump-sum benefit paid by the employer to an employee as a token of appreciation for services rendered. It is governed by the Payment of Gratuity Act, 1972. An employee becomes eligible for gratuity after completing 5 years of continuous service with the same employer (waived in case of death or disability).

Gratuity Calculation Formula

Employees covered under the Gratuity Act:

Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26

Employees NOT covered under the Gratuity Act:

Gratuity = (Last Drawn Salary × 15 × Years of Service) / 30

Government Employees (under CCS Rules):

Gratuity = (Last Drawn Salary × Years of Service × 15) / 26

Where:

Last Drawn Salary = Basic + Dearness Allowance (monthly)
15 = Number of working days considered per month
26 = Working days in a month (for covered employees)
30 = Calendar days (for non-covered employees)

Tax Exemption on Gratuity

Government employees: Gratuity is fully tax-exempt.
Private employees (covered): Exempt up to the least of: (a) Actual gratuity received, (b) 20,00,000, or (c) Formula-based gratuity.
Private employees (not covered): Exempt up to the least of: (a) Actual gratuity, (b) 20,00,000, or (c) Half month salary for each year of service.

How to Use This Calculator

Last Drawn Monthly Salary: Enter your latest monthly basic salary + DA.
Years of Service: Enter the number of completed years of service (minimum 5 for eligibility).
Employee Type: Select whether you are covered under the Gratuity Act, not covered, or a government employee.
Results: View the estimated gratuity, tax-free limit, and taxable portion.

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