ganak.appGratuity Calculator
Free gratuity calculator for India. Calculate your gratuity amount using the formula G = n × b × 15/26. For employees covered and not covered under the Gratuity Act, 1972.
Under Payment of Gratuity Act · Formula: (n × b × 15) / 26
What is Gratuity?
A retirement benefit under Indian labour law
Gratuity is a lump-sum payment made by an employer to an employee as a mark of recognition for the employee's service. It is governed by the Payment of Gratuity Act, 1972, which applies to factories, mines, oilfields, plantations, ports, railway companies, shops, and establishments employing 10 or more persons.
An employee becomes eligible for gratuity after completing a minimum of 5 continuous years of service. Gratuity is payable on superannuation, retirement, resignation, death, or disablement due to accident or disease.
Gratuity Calculation Formula
Two formulas depending on whether the Gratuity Act applies
Employees covered under the Gratuity Act:
Employees not covered under the Gratuity Act:
n = Completed years of service (months > 6 round up to the next year)
b = Last drawn monthly basic salary + dearness allowance (DA)
26 = Working days in a month (30 calendar days minus 4 Sundays)
30 = Calendar days in a month (for employees not covered under the Act)
Example: An employee covered under the Act with 10 years of service and a last drawn salary of ₹35,000 (basic + DA) would receive: (10 × 35,000 × 15) / 26 = ₹2,01,923.
How to Use This Calculator
Calculate your gratuity in three simple steps
Add your monthly basic salary and dearness allowance. Select whether you are covered under the Gratuity Act.
Enter your completed years and additional months of service. The calculator applies the rounding rule automatically.
See your gratuity amount, tax implications, eligibility status, and a year-by-year growth projection.
Eligibility Criteria
Who qualifies for gratuity under Indian law
- Minimum 5 years of continuous service is required. However, the Supreme Court of India has held that 4 years and 240 days may qualify as 5 years for gratuity purposes.
- The Act applies to every establishment employing 10 or more persons on any day in the preceding 12 months.
- Gratuity is payable on retirement, resignation, superannuation, death, or disablement.
- In case of death or disablement, the 5-year minimum service condition is waived.
- If total months of service exceed 6 beyond completed years, the service period is rounded up to the next full year.
Tax Rules on Gratuity
How gratuity is taxed for different employee categories
Government employees:
Gratuity received by central, state, or local government employees is fully exempt from income tax under Section 10(10)(i) of the Income Tax Act.
Private sector (covered under the Act):
The exempt amount is the least of: (a) actual gratuity received, (b) 15 days salary for each completed year of service based on last drawn salary, or (c) ₹20 lakh. Any amount above the exemption is taxable at your income tax slab rate.
Private sector (not covered under the Act):
The exempt amount is the least of: (a) actual gratuity received, (b) half month's salary for each completed year of service based on average salary of last 10 months, or (c) ₹20 lakh.
Assumptions and Limitations
What this calculator includes and excludes
- Gratuity is calculated on basic salary + dearness allowance (DA) only. HRA, conveyance allowance, special allowance, and other components are excluded.
- The salary growth projection assumes a constant annual increase for estimation purposes.
- Tax calculation is simplified using the ₹20 lakh exemption cap. Your actual tax liability may vary based on total income, tax regime, and other exemptions claimed.
- The ₹20 lakh exemption limit may be revised by the government in future budgets.
- Results are for informational purposes. For official calculations, consult your employer or a tax advisor.
Frequently Asked Questions
Common questions and detailed answers