Gratuity Calculator India | Check Eligibility & Math Breakdown

What is Gratuity?

Gratuity is a monetary benefit provided by an employer to an employee for services rendered to the organization. It is essentially a "thank you" bonus for long-term loyalty. The Payment of Gratuity Act, 1972, mandates this payment to employees who meet specific eligibility criteria.

Important Note: Gratuity is NOT deducted from your monthly salary. While some companies include it in your "CTC" breakdown (usually calculated as 4.81% of your Basic salary), it is entirely an employer contribution paid out only upon exit.

Who is Eligible for Gratuity?

To be legally eligible to receive Gratuity, an employee must satisfy the following condition:

5
You must have completed 5 years of continuous service with the same employer.

Exceptions: The 5-year rule does not apply in cases of death or disablement. In such tragic events, Gratuity is payable regardless of the tenure length.

Difference between 15/26 and 15/30

The math changes based on whether your company is covered under the Gratuity Act:

Covered by the Act (15/26 Formula):
This applies to factories, mines, ports, and most private corporate companies with 10 or more employees. You are paid for 15 days of wages for every completed year. A month is considered 26 working days (excluding 4 Sundays).
Formula: (15 / 26) × Last Drawn Salary × Years of Service
Not Covered by the Act (15/30 Formula):
If your organization is not covered, a month is considered 30 days.
Formula: (15 / 30) × Last Drawn Salary × Years of Service

Is Gratuity Taxable?

The tax treatment depends on your employer type:

Govt Employees: 100% Tax Exempt.
Private Employees (Covered): Exempt up to a statutory limit of ₹20,00,000. Any amount above 20L is taxable as "Income from Salary".
Private Employees (Not Covered): Exempt up to ₹20,00,000 or half-month's average salary, whichever is lower.

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Frequently Asked Questions

Gratuity after resignation vs termination?

Whether you resign voluntarily, retire, or are terminated by the company, you are entitled to your gratuity as long as you have completed 5 years of continuous service. The only exception where an employer can legally forfeit your gratuity is if you were terminated for "lawless or riotous behavior" or acts causing financial damage to the company.

I worked for 4 years and 8 months. Am I eligible?

Under the Gratuity Act, if your company is covered, any tenure over 6 months in the final year is rounded up to a full year. Therefore, 4 years and 8 months is legally rounded up to 5 Years, making you eligible. However, some HR departments dispute this, so it is safer to complete 5 full calendar years.

What counts as "Last Drawn Salary"?

Your Last Drawn Salary for gratuity calculations includes ONLY your Basic Salary and Dearness Allowance (DA). It specifically excludes HRA, Special Allowances, Transport Allowances, and Bonuses.

Can Gratuity be denied?

Under Section 4(6) of the Act, gratuity can be partially or wholly forfeited if an employee is terminated for willful omission, negligence causing damage to employer property, or violent behavior. Ordinary performance-based termination does not affect gratuity.

Gratuity Calculator

Service Details

Eligible

Estimated Gratuity Payable

Exactly how is this calculated?

Resignation Scenario

Earning Timeline