Calculate your gratuity using the Payment of Gratuity Act formula. Instant results with tax exemption breakdown — no login required.
| Type | Formula | Tax Exemption |
|---|---|---|
| Covered by Act | (Basic+DA) × 15/26 × Years | Up to ₹20 lakh |
| Not Covered | (Basic+DA) × 15/30 × Years | Up to ₹20 lakh |
| Government | (Basic+DA) × 15/26 × Years | Fully exempt |
* Minimum 5 years of continuous service required. Months > 6 in the final year count as a full additional year under the Gratuity Act.
For employees covered under the Payment of Gratuity Act: Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service. The 26 represents working days in a month, and 15 is half a month's pay. For employers not covered by the Act, 30 calendar days are used: Gratuity = (Basic + DA) × 15 ÷ 30 × Years.
An employee must complete a minimum of 5 years of continuous service with the same employer to be eligible for gratuity. However, gratuity is payable even before 5 years in cases of death or disability of the employee.
Gratuity received by government employees is fully exempt from income tax. For private sector employees covered under the Gratuity Act, the tax-exempt ceiling is ₹20 lakh (raised from ₹10 lakh in 2019). Any amount above ₹20 lakh is taxable at the applicable slab rate.
There is no cap on the gratuity amount an employer can pay. However, the income-tax exemption ceiling for private sector employees is ₹20 lakh. If the calculated gratuity exceeds ₹20 lakh, the surplus is added to the employee's income and taxed at slab rates.
The Payment of Gratuity Act considers working days in a month to be 26 (a standard month has 26 working days, excluding 4 Sundays). The number 15 represents half of 30 days — or roughly half a month's pay for each year of service. Employers not covered by the Act use 30 calendar days instead.