Tax on Gratuity Amount in India
Tax on Gratuity Amount in India Gratuity is a reward given to employees for their loyal service. It’s a one-time...
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Gratuity Calculator
Service of 6+ extra months is rounded up to a full year; otherwise ignored.
Enter your details and click Calculate.
Gratuity Calculator – Calculate Your Gratuity Amount Instantly (India 2025)
What Is a Gratuity?
Understanding your gratuity can be confusing, but it doesn’t have to be.
Our easy-to-use Gratuity Calculator helps you estimate the exact amount you’ll receive when you retire, resign, or complete your service. Whether you’re a private or government employee, this calculator gives you a clear, accurate, and instant result — all in compliance with the Payment of Gratuity Act, 1972.
How to Use the Gratuity Calculator
Gratuity is a statutory benefit paid by employers to employees as a token of appreciation for their long-term service.
Under the Payment of Gratuity Act, 1972, it becomes payable when an employee completes at least five years of continuous service with the same employer. It is typically given at the time of retirement, resignation, death, or disability.
Simply put, gratuity is your employer’s way of saying thank you for your loyalty and dedication.
Step-by-Step Process
- Enter your last drawn basic salary (including dearness allowance).
- Enter the total number of years of service.
- Click “Calculate” to get your gratuity amount instantly.
The calculator uses the official government formula and ensures compliance with the latest gratuity limits and tax exemptions.
Gratuity Calculation Formula
The standard formula as per Indian law is:
Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26
- 15 represents 15 days’ salary for each year of service.
- Last Drawn Salary includes Basic + Dearness Allowance (DA).
- 26 denotes the average number of working days in a month.
Example Calculation
If your last drawn salary is ₹50,000 and you have worked for 10 years:
Gratuity = (15 × 50,000 × 10) ÷ 26 = ₹2,88,461 (approximately)
Eligibility Criteria for Gratuity
To be eligible for gratuity, you must meet the following conditions:
- You have completed 5 or more years of continuous service.
- You have resigned, retired, or your employment has ended due to termination, disability, or death.
- In the case of death or disability, the 5-year rule does not apply.
Gratuity Rules and Exemption Limits (As per 2025 Updates)
For Government Employees
- Entire gratuity amount is 100% tax-free.
- No upper limit on gratuity payment.
For Private Sector Employees
- Maximum tax-free gratuity is ₹20 lakh under Section 10(10) of the Income Tax Act.
- Any amount exceeding ₹20 lakh is taxable as income from salary.
Gratuity Rules and Exemption Limits (As per 2025 Updates)
The taxation of gratuity depends on the type of employment:
Exempted Amount
The least of the following three is exempt from tax:
- ₹20,00,000 (maximum limit)
- Actual gratuity received
- 15 days’ salary for each completed year of service
Taxable Portion
Any amount above the exempt limit is added to your annual taxable income and taxed as per your applicable income tax slab.
When Is Gratuity Paid?
On Retirement
Automatically paid as part of final settlement within 30 days of the retirement date.
On Resignation
The employer must pay gratuity within 30 days of resignation if you are eligible under the 5-year rule.
On Death or Disability
Gratuity is paid to the nominee or legal heir, even if the employee hasn’t completed 5 years.
Common Scenarios and FAQs
Is 4 years and 8 months considered 5 years for gratuity?
Yes, if an employee has completed 4 years and 240 days in the same organization, they are typically eligible for gratuity.
Can an employer deny gratuity payment?
Only under specific conditions such as misconduct, fraud, or termination for moral turpitude as per Section 4(6) of the Gratuity Act
How do I claim gratuity?
Submit Form I to your employer within 30 days of resignation or retirement. The employer is legally bound to release the payment within one month.
Is gratuity paid if an employee dies before 5 years of service?
Yes. In case of death or permanent disability, gratuity is payable irrespective of service duration.
Is gratuity included in CTC?
In most cases, gratuity is shown as part of your Cost to Company (CTC) but is paid only when you leave after completing 5 years of service.
Benefits of Using Our Gratuity Calculator
- 100% compliance with the latest Indian laws
- Instant results in seconds
- Accurate calculations for both government and private employees
- Mobile-friendly and easy to use
- Completely free and secure
Plan Your Future with Accurate Gratuity Insights
Understanding your gratuity helps you plan your post-retirement finances more effectively.
Use our calculator to get a precise estimate today and make informed decisions about your savings, investments, and financial goals.