Gratuity Calculator India
Calculate the gratuity amount payable to you upon leaving or retiring from an organization.
Gratuity / Severance Calculator
Formula: (Last Salary × 15 × Years) ÷ 26 — commonly used for end-of-service gratuity calculations
Eligibility: Most jurisdictions require a minimum service period (commonly 5 years) before gratuity is payable.
Note: Local labour laws may apply different formulas. Check your country's regulations.
Gratuity Summary
Advertisement
How Gratuity is Calculated in India
Gratuity is a statutory monetary reward paid by an employer to an employee for their dedicated service under the Payment of Gratuity Act, 1972.
Last Drawn Salary = Basic Salary + Dearness Allowance (DA)
15 = 15 days of wages calculated per completed year of service
26 = Number of working days in a month (excluding 4 Sundays)
Tenure = Completed years of service (rounded up if > 6 months in final year)
Tax Exemption on Gratuity
Under Section 10(10) of the Income Tax Act, gratuity received by private-sector employees covered under the Act is exempt up to a maximum lifetime statutory ceiling of ₹20,00,000 (₹20 Lakhs). Any excess gratuity received beyond this limit is taxable as income from salary.
Frequently Asked Questions
Is 4 years and 7 months of service rounded up to 5 years?
For the purpose of calculating gratuity amount once eligible, any period of service above 6 months is rounded up to the nearest whole year. However, to attain initial eligibility, the statutory requirement is 5 full continuous years.
Is gratuity deducted from my monthly salary?
No. Gratuity is paid entirely by the employer. It is part of your Cost to Company (CTC) structure, but no deduction is made from your monthly take-home salary.