Gratuity Calculator — Know How Much Your Employer Owes You
Calculate gratuity amount based on your last drawn salary and years of service. Understand the Payment of Gratuity Act 1972 rules and tax exemption limits.
Gratuity is a lump sum benefit paid by your employer when you leave the company after completing at least 5 years of continuous service. It is a token of appreciation for your loyalty and service. The amount depends on your last drawn basic salary plus dearness allowance and your total years of service. Under the Payment of Gratuity Act 1972 the maximum tax-free gratuity limit was increased to Rs 20 lakh. Understanding your gratuity entitlement helps in retirement planning and job change decisions.
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Key Information
| Parameter | Details |
|---|---|
| Gratuity Formula | (Basic + DA) x 15/26 x Years of Service |
| Minimum Service Required | 5 years continuous |
| Maximum Tax-Free Gratuity | Rs 20 lakh |
| Applicable To | Companies with 10+ employees |
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Use Calculator NowFrequently Asked Questions
How is gratuity calculated?
Gratuity is calculated using the formula: Gratuity = (Last Drawn Basic Salary + DA) x 15 x Years of Service / 26. The 15 represents 15 days of salary per year of service and 26 represents working days in a month. Each completed year beyond 6 months is rounded up. For example with a basic salary of Rs 50000 and 10 years of service your gratuity would be Rs 2.88 lakh.
Is gratuity taxable?
Gratuity received by government employees is fully exempt from income tax. For private sector employees covered under the Gratuity Act the exemption is limited to the least of: actual gratuity received or Rs 20 lakh or the amount calculated using the formula. Any amount exceeding this is taxable under your applicable tax slab.
Do I get gratuity if I resign?
Yes you are entitled to gratuity even if you resign voluntarily provided you have completed 5 years of continuous service with the employer. The 5-year rule is mandatory and there are very limited exceptions. Some companies may have a gratuity policy that is more generous than the statutory requirement.
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Last updated: 24 March 2026