Gratuity Calculator — Calculate Gratuity Amount India
Calculate your exact gratuity payout under the Payment of Gratuity Act 1972. Enter last drawn basic salary and years of service — get gratuity amount, tax-free portion (up to ₹20 lakh), and taxable portion instantly. Free, no sign-up.
This gratuity calculator uses the formula prescribed under The Payment of Gratuity Act, 1972 — 15 days\' salary for every completed year of service, with 26 working days per month for covered employers. Tax exemption limits reflect Section 10(10) of the Income Tax Act as amended in 2019 (₹20 lakh ceiling). The 6-month rounding rule is applied as per Supreme Court and High Court interpretations of Section 2(b) of the Act. All calculations are client-side. Last reviewed: June 2026.
Gratuity Calculator India — Payment of Gratuity Act 1972 Formula & Rules
Gratuity is one of the most underappreciated components of an employee\'s total compensation — yet for someone with 15–20 years at a single company, it can add up to several lakhs of rupees paid in a lump sum when they leave. Understanding how gratuity is calculated, when it is payable, and how much of it is tax-free directly impacts your retirement planning and job-change decisions.
The Payment of Gratuity Act, 1972 is the central legislation governing gratuity in India. It applies to every factory, mine, oilfield, plantation, port, railway, shop, or establishment with 10 or more employees. Once an establishment falls under the Act, it continues to be covered even if its workforce drops below 10.
Gratuity Formula — Two Versions
Example: Last drawn basic ₹50,000/month, 10 years service, covered → Gratuity = ₹50,000 × 15 ÷ 26 × 10 = ₹2,88,462. Same but not covered → ₹50,000 × 15 ÷ 30 × 10 = ₹2,50,000. The Act\'s formula gives 15.4% more.
Gratuity Amount Reference — Common Salary vs Service Combinations
| Monthly Basic | 5 Years | 10 Years | 15 Years | 20 Years | 30 Years |
|---|---|---|---|---|---|
| ₹25,000 | ₹72,115 | ₹1,44,231 | ₹2,16,346 | ₹2,88,462 | ₹4,32,692 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹4,32,692 | ₹5,76,923 | ₹8,65,385 |
| ₹75,000 | ₹2,16,346 | ₹4,32,692 | ₹6,49,038 | ₹8,65,385 | ₹12,98,077 |
| ₹1,00,000 | ₹2,88,462 | ₹5,76,923 | ₹8,65,385 | ₹11,53,846 | ₹17,30,769 |
| ₹1,50,000 | ₹4,32,692 | ₹8,65,385 | ₹12,98,077 | ₹17,30,769 | ₹25,96,154* |
| ₹2,00,000 | ₹5,76,923 | ₹11,53,846 | ₹17,30,769 | ₹23,07,692* | ₹34,61,538* |
* Exceeds ₹20L — amount above ₹20L is taxable. Covered under Act formula (÷26) used throughout.
The 6-Month Rounding Rule — Critical for Your Calculation
How partial years are counted:
10 years 4 months → 10 years (months ≤ 6, not rounded up)
10 years 6 months → 10 years (exactly 6 months does NOT round up)
10 years 7 months → 11 years (months > 6, rounded up)
10 years 11 months → 11 years
Impact: On ₹50,000 basic, the difference between 10y 6mo and 10y 7mo is ₹28,846 — nearly one month\'s salary. If you\'re planning to resign, check your tenure carefully before giving notice.
Gratuity Tax Treatment — Section 10(10)
Gratuity received by private sector employees is tax-free under Section 10(10) of the Income Tax Act up to ₹20 lakh. This limit was raised from ₹10 lakh in 2019 and applies per employer (not cumulative across jobs). Key rules:
| Category | Tax Exemption | Notes |
|---|---|---|
| Government employees (Central/State) | Fully exempt — no ceiling | All gratuity tax-free regardless of amount |
| Private sector (Act covered) | Exempt up to ₹20 lakh | Excess over ₹20L taxed at slab rate |
| Private sector (not covered) | Exempt up to ₹20 lakh | Same ceiling, different formula |
| Death / Disability | Fully exempt for nominees | No ceiling, no service minimum |
If your gratuity exceeds ₹20 lakh, the excess is added to your income in the year of receipt and taxed at your applicable slab rate. Use our TDS Calculator to estimate the tax payable on the taxable portion. If you received gratuity from multiple employers, the ₹20L exemption applies separately to each employer\'s gratuity.
How Gratuity Fits into Your Total Retirement Planning
Gratuity is one of three mandatory retirement benefits for Indian salaried employees. Together with EPF and EPS pension, they form your formal retirement safety net: EPF — both you and your employer contribute 12% of basic each month, accumulating a corpus over your career. EPS — employer\'s 8.33% (capped) funds a monthly pension post-retirement. Gratuity — lump sum paid by employer on exit after 5+ years. Use the EPF Calculator to project your PF corpus, the NPS Calculator to add an additional voluntary pension layer with 80CCD(1B) tax benefit, and the In-Hand Salary Calculator to understand how gratuity provision (4.81% of basic) reduces your monthly take-home within CTC.
Gratuity vs Other Retirement Benefits — Quick Comparison
| Feature | Gratuity | EPF | EPS (Pension) |
|---|---|---|---|
| Who pays | Employer only | Employee + Employer | Employer only (8.33%) |
| Minimum service | 5 years | No minimum | 10 years for pension |
| Payout type | Lump sum on exit | Lump sum on retirement | Monthly pension for life |
| Tax status | Exempt up to ₹20L | EEE (5+ years service) | Taxable as income |
| Formula | 15/26 × Basic × Years | 12% × Basic (compounded) | Pensionable salary × Service ÷ 70 |
If you want to verify your complete salary structure and understand what percentage of your CTC actually reaches your bank account, use the In-Hand Salary Calculator. For IFSC code needed while transferring your gratuity payment to a new account, use the IFSC Code Lookup.
Gratuity formula per Ministry of Labour & Employment, Payment of Gratuity Act 1972, Section 4. Tax exemption per Income Tax Department Section 10(10). ₹20L ceiling per Finance Ministry notification 2019. 6-month rounding rule per EPFO and Supreme Court interpretations. Last reviewed Jun 2026 by BankZop Financial Editorial Team.