Gratuity Calculator

Calculate your gratuity entitlement under the Payment of Gratuity Act, 1972.

Employment Details

Last Drawn Salary (Basic + DA)

₹

₹1,000₹1,00,00,000

Years of Service

years

1 years50 years

Gratuity Amount

₹2,88,462

Equivalent to: 5.8 months salary

Last Drawn Salary₹50,000

Years of Service10 years

What is Gratuity?

Gratuity is a lump-sum payment made by employers to employees as a token of appreciation for their long service. It is governed by the Payment of Gratuity Act, 1972, which applies to establishments with 10 or more employees. Gratuity is one of the key retirement benefits in India, alongside EPF and pension.

Eligibility Criteria

Minimum Service: An employee must complete at least 5 years of continuous service with the same employer to be eligible for gratuity. However, this rule is relaxed in cases of death or disability—employees receive gratuity regardless of their tenure.

Covered Establishments: The Gratuity Act applies to factories, mines, oilfields, plantations, ports, railway companies, shops, and other establishments with 10 or more employees on any day in the preceding 12 months.

Maximum Gratuity Limit

As per the 2019 amendment, the maximum gratuity payable under the Act is ₹20,00,000. This cap applies to employees covered under the Payment of Gratuity Act. However, many private companies, especially in IT and other sectors, voluntarily pay higher gratuity amounts as part of their HR policies.

Tax Treatment

For government employees, the entire gratuity received is exempt from income tax. For private sector employees covered under the Gratuity Act, the exemption is the least of: (a) actual gratuity received, (b) ₹20 lakhs, or (c) 15 days' salary for each completed year of service. Any amount above this is taxable as per your income tax slab.

How Gratuity Calculator Works

This calculator uses the formula prescribed under the Payment of Gratuity Act, 1972. Enter your last drawn salary (Basic + Dearness Allowance) and years of service to calculate your gratuity entitlement.

Formula used:

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

Where 15 represents 15 days of salary for each year of service, and 26 is the number of working days in a month as per the Act.

What is Gratuity?

Eligibility Criteria

Maximum Gratuity Limit

Tax Treatment

Gratuity Calculator

What is Gratuity?

Eligibility Criteria

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