Gratuity received by government employees is fully tax-exempt. For private-sector employees covered by the Act, it is exempt up to a prescribed limit; amounts beyond that limit are taxable.

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Gratuity Calculator

Q: Who is eligible for gratuity?

Under the Payment of Gratuity Act, an employee is generally eligible after completing at least 5 years of continuous service with the same employer, though this condition is relaxed in case of death or disability.

Estimate the gratuity payable when leaving a job, using the formula set out in the Payment of Gratuity Act, 1972.

Service details

Last drawn basic salary + DA (monthly) ₹60,000

Years of service 8 yrs

Covered under the Gratuity Act?

Gratuity payable

Estimated gratuity

₹0

Years counted0

Statutory cap₹20,00,000

Requires at least 5 years of continuous service (relaxed for death or disability). Figure is capped at the statutory maximum.

How gratuity is calculated

For employees covered under the Act, a fraction of the last drawn salary is paid for every year of service, using 26 working days a month as the base. Employees not covered by the Act often receive gratuity under a different, slightly less generous formula agreed with their employer.

Covered under the Act: Gratuity = (Last salary × 15 × Years of service) / 26 Not covered under the Act: Gratuity = (Last salary × 15 × Years of service) / 30

Any service period over 6 months in the final year is rounded up to a full year. The total payable is capped at ₹20,00,000 under current rules.

Frequently asked

Who is eligible for gratuity?

Generally, employees who complete at least 5 years of continuous service with the same employer, with this requirement relaxed in cases of death or disability.

Is gratuity taxable?

Government employees receive it fully tax-free. Private-sector employees covered by the Act get exemption up to the statutory limit, with anything beyond that taxed as income.

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Figures are estimates for planning purposes only and do not constitute legal or tax advice.