Gratuity Calculator (India)

Under the Payment of Gratuity Act, gratuity = (Last drawn basic + DA) × 15/26 × completed years of service. Example: last basic ₹50,000, 12 years of service. Gratuity = 50,000 × 15/26 × 12 = ₹3,46,154. Eligibility requires 5+ years of continuous service (or in case of death/disability, no minimum). Maximum tax-free gratuity is ₹20 lakh (lifetime cap). For organisations not covered by the Act, formula is similar but uses 15/30 days instead of 15/26. The calculator handles both covered and non-covered scenarios.

Formula under the Payment of Gratuity Act: Gratuity = (Last Drawn Salary × 15 × Years of Service) / 26. "Salary" here means basic + DA. The "15/26" represents 15 days of salary for every year, dividing monthly salary by 26 (working days). Years of service: any fraction of 6+ months counts as a full year, less than 6 months is rounded down. Example: 7 years 8 months = 8 years; 7 years 4 months = 7 years. Tax-free up to ₹20 lakh in lifetime; excess is taxable. The calculator follows these statutory rules exactly.

5 years of continuous service is the standard requirement for gratuity eligibility under the Payment of Gratuity Act, 1972. Continuous service means working in the same organisation without break. In case of death or permanent disability, the 5-year rule is waived — gratuity is paid regardless of tenure. Recent court rulings have allowed gratuity at 4 years 240 days (treating it as 5 years). Maternity leave and authorised leaves count as continuous service. Resignation before 5 years means no gratuity (unless your organisation has a more generous policy). The calculator validates the eligibility condition.

Yes, but with limits. For employees covered under the Payment of Gratuity Act, gratuity up to ₹20 lakh in a lifetime is tax-free. Anything above ₹20 lakh is taxable as "income from salary" in the year of receipt. For government employees, gratuity is fully tax-free. The ₹20 lakh exemption is cumulative across all employers in your career. So if you received ₹15 lakh from one employer, only ₹5 lakh is exempt from the next. Plan large gratuity payments in years of lower income for tax efficiency. The calculator shows tax-free vs taxable portions.

After 5 years (the minimum eligibility), gratuity = (last basic + DA) × 15/26 × 5. Example: basic ₹35,000, 5 years of service. Gratuity = 35,000 × 15/26 × 5 = ₹1,00,962. The 5-year mark is the threshold — even one day less typically disqualifies you (with rare exceptions for 4 years 240 days that some courts have accepted). Plan job changes around this milestone if possible — leaving at 4 years 11 months loses you a real amount. Tax-free up to lifetime ₹20 lakh limit. The calculator computes gratuity for any tenure beyond 5 years.

Generally, no gratuity is payable if you leave before completing 5 years of continuous service. The Payment of Gratuity Act mandates 5 years as the threshold. Two exceptions: (1) death or permanent disability — full gratuity is paid regardless of service length, to nominee/family; (2) some High Court rulings accepting 4 years 240 days as eligible (case-specific). Some organisations voluntarily pay gratuity earlier as part of their HR policy — check your offer letter. If staying just a few more months gets you gratuity, it's almost always worth it financially. The calculator confirms eligibility status.

No, notice period served is not added to your tenure for gratuity calculation. Your gratuity is calculated on actual completed years of service up to your last working day. However, if your notice period takes you across the 5-year mark or completes 6 months of an additional year, that helps. Example: completing 4 years 7 months including notice period — that rounds to 5 years for gratuity. So the timing of resignation matters. Check the exact day your service crosses the relevant threshold. The calculator accepts dates and shows whether you cross critical eligibility points.