What is a gratuity Calculator?
Gratuity is a lump sum your employer pays as a thank-you for continuous service, mandatory once you’ve completed 5 years with an employer covered under the Payment of Gratuity Act, 1972 (most establishments with 10+ employees). It’s calculated purely from your last drawn Basic + DA and total years of service — your other salary components don’t factor in.
Enter your last drawn monthly Basic + DA and total years of service to see the gratuity payable.
How gratuity is calculated
The 26 represents assumed working days in a month, and 15 is half a month’s salary per year of service — this is the formula for employees covered under the Payment of Gratuity Act. If your service in the final year is 6 months or more, it’s rounded up to a full year.
Frequently asked questions
Do I qualify for gratuity if I resign before 5 years?
Generally no — 5 years of continuous service is the minimum threshold under the Act, except in cases of death or disablement, where the 5-year requirement is waived.
Is gratuity taxable?
For employees covered under the Act, gratuity is tax-exempt up to ₹20 lakh (a limit last revised in 2019) — anything received above that ceiling is taxable as salary income. Confirm the current exemption limit, since it has been revised before.
Is there a cap on the gratuity amount itself?
Yes, separately from the tax-exemption limit, the Act itself caps payable gratuity at ₹20 lakh, regardless of what the formula computes for very long tenures or high salaries.