What is the formula for gratuity calculation in India?

For employees covered under the Gratuity Act: Gratuity = (Basic + DA) × 15 × Years of Service ÷ 26. For non-covered employees: (Basic + DA) × 15 × Years ÷ 30. Fractions of a year equal to or more than 6 months are rounded up.

What is the minimum service period to be eligible for gratuity?

You need a minimum of 5 years of continuous service to be eligible for gratuity. This condition is waived in case of death or total disability of the employee.

What is the maximum gratuity limit in India?

The maximum tax-exempt gratuity is ₹20,00,000 (₹20 lakhs) as revised in 2024. Gratuity paid above this limit is added to income and taxed at applicable slab rates.

Is gratuity taxable in India?

For government employees, gratuity is fully tax-exempt. For private sector employees covered under the Gratuity Act, gratuity is exempt up to ₹20 lakhs. For non-covered employees, the exempt amount is the minimum of ₹20L, actual gratuity, or half month's salary per year of service.

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Gratuity Calculator

Free to Use

Calculate gratuity payable under Payment of Gratuity Act, 1972. Find taxable and exempt gratuity for covered and non-covered employees.

Country

Employment Details

Last Drawn Monthly Basic + DA (₹)

Basic salary + Dearness Allowance per month

Service Period

Years

Months (0–11)

Entered: 7 yrs 3 mo→Effective: 7 yrs

Employment Type

Regular employees require a minimum of 5 continuous years of service.

Employee Category

Organizations with 10+ employees are covered under Payment of Gratuity Act, 1972.

Reason for Leaving

Standard service rules apply.

Inflation Adjustment (Optional)

Years to Retirement

Shows present value of future gratuity at 6% inflation

₹2,01,923

Gratuity Amount

Gratuity Breakdown

Monthly Basic + DA

₹50,000

Service Period (entered)

7 yrs 3 mo

Effective Years Used

After rounding rule (months ≥ 6 → round up)

7 yrs

Formula

Basic+DA × 15 × 7 ÷ 26

Tax Exempt Amount

Up to ₹20,00,000 (private — covered)

₹2,01,923

Taxable Gratuity

max(0, Gratuity − ₹20L)

₹0

Gratuity Composition

Tax-Exempt Gratuity₹2,01,923 (100.0%)

Your entire gratuity of ₹2,01,923 is tax-exempt.

Inflation-Adjusted Value

₹2,01,923

Gratuity at Retirement

Nominal value (future rupees)

₹1,12,753

Present Value Today

At 6% inflation, 10 yrs away

In today's purchasing power, your ₹2,01,923 gratuity at retirement is worth approximately ₹1,12,753.

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How gratuity is calculated

Covered employees (Gratuity Act): Basic+DA × 15 × Years ÷ 26
Not covered: Basic+DA × 15 × Years ÷ 30
Months ≥ 6 in the last year round up to the next full year
Fixed-term (Labour Code 2023): eligible after 1 year, not 5
Death/Disability: eligible from Day 1, no minimum service
VRS: eligible after 10 years; Govt employees: fully tax-exempt

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