Tax-Free Limit: ₹20 Lakh | Minimum 5 Years Service

Free Gratuity Calculator India 2026

Calculate your gratuity amount instantly based on last drawn salary and years of continuous service.

Enter Your Details

Monthly basic salary + dearness allowance at the time of leaving
Total completed years of continuous service (min 5 years)
Organizations with 10+ employees are covered under the Act

Your Gratuity Calculation Results

✓ Eligible for Gratuity (5+ Years Service)
Last Drawn Salary (Basic + DA) ₹50,000
Years of Service 10 years
Calculation Formula 15/26 × Salary × Years
Total Gratuity Amount
₹2,88,462

Tax Implications

Your gratuity of ₹2,88,462 is fully tax-free (under ₹20 lakh limit)

What is Gratuity?

Gratuity is a lump sum amount paid by an employer to an employee as a token of appreciation for the services rendered during the period of employment. It is governed by the Payment of Gratuity Act, 1972 in India.

Gratuity is payable when an employee leaves the organization after completing at least 5 years of continuous service due to retirement, resignation, death, or disability.

Gratuity Calculation Formula

For Employees Covered Under Gratuity Act:

Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26

For Employees NOT Covered Under Gratuity Act:

Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 30

Note: "Last Drawn Salary" means Basic Salary + Dearness Allowance

Example: Gratuity for ₹50,000 Salary with 10 Years Service

Calculation Breakdown (Covered under Act)

Last Drawn Salary: ₹50,000

Years of Service: 10 years

Formula: (15 × 50,000 × 10) ÷ 26

Gratuity Amount: ₹2,88,462

Gratuity Eligibility Criteria

Gratuity Tax Exemption Rules 2026

Employee Category Tax-Free Limit
Government Employees Fully exempt (no limit)
Employees Covered under Gratuity Act Up to ₹20,00,000
Other Employees Least of: Actual gratuity, ₹20 lakh, or 15 days salary × years

When is Gratuity Payable?

Maximum Gratuity Limit

The maximum gratuity payable under the Payment of Gratuity Act is ₹20,00,000 (Twenty Lakh Rupees). Any amount above this is subject to employer's discretion and may be taxable.

Frequently Asked Questions

What is the minimum service period for gratuity?
An employee must complete at least 5 years of continuous service to be eligible for gratuity. However, this requirement is waived in case of death or disablement.
Is gratuity taxable in India?
For government employees, gratuity is fully tax-exempt. For private sector employees covered under the Gratuity Act, gratuity up to ₹20 lakh is tax-free. Any amount above this limit is taxable as per applicable income tax slab.
What happens if I leave before 5 years?
If you resign before completing 5 years of continuous service, you are not entitled to gratuity under the Payment of Gratuity Act. However, some employers may have their own policies providing gratuity for shorter tenures.
Can gratuity be forfeited?
Gratuity can be wholly or partially forfeited if an employee's services are terminated due to riotous or disorderly conduct, or any act of violence, or for any act that constitutes an offense involving moral turpitude.

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