Gratuity Calculator Calculate Your Retirement Benefit
Calculate gratuity as per the Payment of Gratuity Act, 1972
Plan your retirement better by calculating your gratuity amount based on your salary, years of service, and expected increments. Get accurate projections as per Indian laws.
Gratuity Calculator
Calculate your gratuity amount based on Indian laws
26 for organizations covered under the Act, 30 for others
💡 Tip: Gratuity is calculated as (Last drawn salary × Years of service × 15) / 26 for organizations covered under the Act.
Understanding Gratuity in India
What is Gratuity?
- A lump sum amount paid by employer to employee as a token of appreciation
- Governed by the Payment of Gratuity Act, 1972
- Payable to employees on retirement, resignation, or termination
- Applicable to organizations with 10+ employees
Eligibility Criteria
- Minimum Service: 5 years of continuous service
- Exceptions: Death or disability (no minimum service required)
- Maximum Limit: ₹20 lakhs (as of 2025)
- Calculation Base: Last drawn salary (basic + DA)
Calculation Formula
- For organizations covered: (Last drawn salary × Years of service × 15) / 26
- For others: (Last drawn salary × Years of service × 15) / 30
- Salary Component: Basic salary + Dearness Allowance (DA)
- Rounding: 6+ months counted as 1 year
Tax Implications
- Tax Exempt: Government employees (fully exempt)
- Private Sector: Exempt up to ₹20 lakhs (if continuous service ≥5 years)
- Section 10(10): Provides tax exemption under Income Tax Act
- Amount Above Limit: Taxable as per income tax slab
Important Notes
- This calculator provides estimates. Actual gratuity may vary based on company policy and regulatory changes.
- Gratuity must be paid within 30 days of becoming due. Interest is payable for delayed payments.
- In case of termination due to misconduct, gratuity can be forfeited in part or full.
- The maximum gratuity limit was increased to ₹20 lakhs from ₹10 lakhs in 2010.
Why Our Gratuity Calculator Stands Out
Compliant with Indian Laws
Follows the Payment of Gratuity Act, 1972 and uses the correct formula with the ₹20 lakh ceiling applicable from 2024 onwards.
Salary Increment Projection
Account for future salary increments to project your gratuity at retirement, helping you plan your finances better.
Tax Exemption Details
Clear information on tax exemptions under Section 10(10) for both government and private sector employees.
How to Use the Gratuity Calculator
Enter Current Salary Details
Input your current basic salary plus dearness allowance (DA). Only basic + DA is considered for gratuity calculation, not your gross salary.
Add Years of Service
Enter your completed years of service. If you're planning for retirement, add your current service years and expected future years.
Set Expected Increments (Optional)
If projecting future gratuity, add your expected annual salary increment percentage. Typical increments range from 5-10% per year.
View Your Gratuity Amount
See your calculated gratuity amount as per the Act's formula, capped at the maximum limit of ₹20 lakhs if applicable.
Frequently Asked Questions
Who is eligible for gratuity in India?
Employees who have completed at least 5 years of continuous service with an organization employing 10 or more people are eligible for gratuity. Exceptions apply in cases of death or disablement where the 5-year minimum is waived. Both government and private sector employees are covered.
How is gratuity calculated as per Indian law?
For organizations covered under the Act: Gratuity = (Last drawn salary × Years of service × 15) / 26. For others (seasonal establishments): (Last drawn salary × Years of service × 15) / 30. Only basic salary plus DA is considered. The maximum limit is ₹20 lakhs as of 2025.
Is gratuity taxable in India?
For government employees, gratuity is fully tax-exempt. For private sector employees, gratuity is exempt up to ₹20 lakhs under Section 10(10) if they've completed at least 5 years of service. Any amount exceeding ₹20 lakhs is taxable as per your income tax slab.
When is gratuity paid to employees?
Gratuity is paid upon retirement, resignation, death, or disablement. The employer must pay gratuity within 30 days from the date it becomes payable. If delayed beyond 30 days, the employer must pay simple interest at the rate notified by the government for the delay period.
Can gratuity be forfeited?
Yes, gratuity can be partially or fully forfeited if an employee is terminated for misconduct involving moral turpitude, violence, theft, fraud, or sabotage. However, proper procedures must be followed and the forfeiture must comply with the provisions of the Payment of Gratuity Act, 1972.
What if I change jobs before 5 years?
If you resign before completing 5 years of service, you are not legally entitled to gratuity under the Payment of Gratuity Act. However, some companies voluntarily pay gratuity even for shorter tenures as per their internal HR policies. This is discretionary and not mandatory.