Gratuity Calculator
Tax & SalaryWork out the gratuity payable under the Payment of Gratuity Act, and how much of it is tax free.
Runs entirely in your browser — nothing is uploaded
Features
- Handles both formulas — 15/26 for covered employers and 15/30 for those outside the Act.
- Applies the rule that a final year over six months counts as a whole year.
- Tells you how far you are from the five-year eligibility mark.
- Splits the amount into the tax-exempt portion and the taxable remainder.
- Shows what the same salary would earn at 5, 10, 15, 20, 25 and 30 years.
How to use the Gratuity Calculator
- 1Enter your last drawn basic pay plus dearness allowance — not gross, and not CTC.
- 2Enter your completed years and any additional months of service.
- 3Set whether your employer is covered by the Act, then read the amount and the working.
Frequently asked questions
How is gratuity calculated?
For employers covered by the Payment of Gratuity Act it is 15 × last drawn salary × years of service ÷ 26, where salary means basic pay plus dearness allowance. Employers outside the Act use a 30-day month instead of 26, which produces a smaller amount for the same service.
How many years do I need to be eligible?
Five years of continuous service with the same employer. The requirement is waived if service ends because of death or disablement, in which case gratuity is payable for the service actually completed.
Does four years and seven months count as five years?
No — the six-month rounding rule applies to the final year of service only after you have crossed five years. Some courts have held that 4 years and 240 days qualifies in certain establishments, but it is disputed and employers commonly refuse it. Treat five full years as the safe threshold.
Is gratuity taxable?
Gratuity from government service is fully exempt. For everyone else, up to ₹20 lakh is exempt under section 10(10) and anything above that is added to your salary income and taxed at your slab rate. The ₹20 lakh ceiling is a lifetime limit across every employer, not per job.
Is gratuity paid on my CTC?
No. It is calculated on basic pay plus dearness allowance, which is usually 40% to 50% of CTC. Employers often show a gratuity line inside your CTC as an accrual of roughly 4.81% of basic — that is what they set aside, and you only receive it once you complete five years.