Gratuity Calculator
Calculate your gratuity amount based on your last drawn salary and years of service
Gratuity Calculator
₹1,000₹50K₹10,00,000
5 years10 years50 years
Organizations with 10+ employees are typically covered under the Payment of Gratuity Act, 1972.
Gratuity Calculation Results
Total Gratuity Amount
₹0
Calculation Details
Last Salary
₹50K
Years of Service
10 years
Formula Used
(15 × ₹50K × 10) ÷ 26
Organization covered under Gratuity Act
Tax Information
• Gratuity up to ₹20,00,000 is tax-free
• Amount above ₹20,00,000 is taxable as salary income
• No TDS if within exemption limit
What is Gratuity?
Gratuity is a retirement benefit paid by employers to employees under the Payment of Gratuity Act, 1972. It serves as a token of appreciation for the employee's long-term service and provides financial security during retirement or job transition.
Key Requirements
- •Minimum 5 years of continuous service required
- •Applicable to organizations with 10+ employees
- •Payable on retirement, resignation, or death
Tax Benefits
- •Up to ₹20 lakh is tax-free
- •Excess amount is taxable as salary
- •No TDS if within exemption limit
Gratuity Calculation Formula
For organizations covered under Gratuity Act:
Gratuity = (15 × Last Salary × Years of Service) ÷ 26
For organizations not covered under the Act:
Gratuity = Last Salary × 0.5 × Years of Service
Note: The gratuity amount is capped at ₹20,00,000 as per the latest amendment to the Payment of Gratuity Act.
Important Points
- ✓Last drawn salary includes basic salary + dearness allowance (DA)
- ✓Years of service are rounded to the nearest full year
- ✓If service is more than 6 months in the last year, it's counted as a full year
- ✓Gratuity is payable even if the employee is terminated (except for misconduct)