🇮🇳 India
Gratuity Calculator India
The gratuity calculator estimates the lump-sum amount payable to an employee in India based on last drawn Basic + DA, years of service, and organisation type. It follows the Payment of Gratuity Act formula for covered private-sector establishments, includes a not-covered estimate, and gives a separate government employee option. The result shows eligibility, formula, tax-exempt limit, and the effect of longer service.
How gratuity changes with years of service
The table updates from your salary input and shows how service length changes the payout. This helps employees decide whether another year of service meaningfully changes the benefit.
| Service | Projected gratuity |
|---|
How to use
- Enter your last drawn monthly Basic + DA, not gross CTC.
- Enter completed years of continuous service, using decimals if needed.
- Select whether your organisation is covered under the Act, not covered, or government.
- Press calculate to view gratuity, tax-exempt amount, taxable amount, and formula.
- Use the projection table to compare service lengths such as 5, 10, 15, 20, and 30 years.
Formula
For organisations covered under the Payment of Gratuity Act, the formula is: Gratuity = Monthly Salary × 15 × completed years of service ÷ 26. Salary means last drawn Basic + Dearness Allowance. The number 15 represents 15 days of salary for every completed year, and 26 represents working days in a month. For organisations not covered under the Act, a 30-day month convention is often used for estimates: Monthly Salary × 15 × completed years ÷ 30. Government employees may follow separate retirement rules.
Service years are usually counted as completed years for formula purposes. The calculator floors decimal years for covered and not-covered formula estimates, while the government option uses the entered decimal value for a half-month salary estimate. Payroll policy and law should be checked for final settlement.
Worked example
If an employee’s last drawn Basic + DA is ₹50,000 and completed service is 10 years in a covered organisation, gratuity is ₹50,000 × 15 × 10 ÷ 26 = ₹2,88,462. If service is 20 years at the same salary, the formula gives ₹5,76,923. At high salary and long service, the formula amount can cross the statutory or tax-exempt limit. This is why the calculator also shows the ₹20 lakh exemption planning threshold.
Reference table: gratuity by salary and service
| Monthly salary | 5 years | 10 years | 15 years | 20 years |
|---|---|---|---|---|
| ₹25,000 | ₹72,115 | ₹1,44,231 | ₹2,16,346 | ₹2,88,462 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹4,32,692 | ₹5,76,923 |
| ₹75,000 | ₹2,16,346 | ₹4,32,692 | ₹6,49,038 | ₹8,65,385 |
| ₹1,00,000 | ₹2,88,462 | ₹5,76,923 | ₹8,65,385 | ₹11,53,846 |
Does gratuity amount change by state?
For private-sector employees covered under the Payment of Gratuity Act, the core gratuity formula is a central law and is broadly the same across Indian states. Andhra Pradesh, Telangana, Karnataka, Maharashtra, Tamil Nadu, Delhi, Gujarat, and other states do not use different private-sector formulas merely because the employee works there. State government employees may have service rules, retirement rules, and administrative procedures that differ from central government or private employment.
| Employee category | Formula basis | State impact |
|---|---|---|
| Central Government | Service rules and retirement benefit rules | Not based on private-sector state formula |
| State Government | State service rules | Can differ by state cadre and notification |
| Private sector covered under Act | Salary × 15 × years ÷ 26 | Central formula broadly applies across states |
| Private sector not covered | Contract/policy estimate, often ÷ 30 | Depends on employer policy |
Important notes for India
- Minimum five years service is generally required, except death or disability cases.
- Use Basic + DA, not CTC, gross salary, bonus, or reimbursements.
- ₹20 lakh is an important exemption and ceiling threshold for private-sector planning.
- Final settlement should match HR policy, service record, nomination, and tax rules.
FAQ
What is gratuity and who is eligible?
Gratuity is a lump-sum benefit paid by an employer as a reward for long service. In the private sector, eligibility generally starts after five years of continuous service under the Payment of Gratuity Act, 1972, unless death or disability applies. The amount is based on last drawn Basic + DA and completed years of service. It is separate from PF, bonus, leave encashment, and notice pay. Employees in factories, shops, establishments, mines, ports, plantations, oilfields, railway companies, and other covered organisations may be eligible when the Act applies.
What is the minimum service period for gratuity?
The normal minimum service period is five years of continuous service for employees covered under the Payment of Gratuity Act. A commonly discussed exception applies when employment ends due to death or disablement; in such cases, the five-year condition does not apply. Courts and employers may also consider specific interpretations for service beyond four years and 240 days, but payroll departments often follow conservative internal rules. The safest approach is to check your appointment terms, HR policy, and the Act. This calculator shows a not-eligible message when service is below five years for non-government cases.
What is the maximum gratuity amount in India?
For many non-government employees, the tax-exempt gratuity limit is ₹20 lakh. The statutory ceiling under the Act has also been aligned around this level for covered employees. If an employer pays more, the excess may be taxable depending on employee category, organisation type, and tax rules. Government employees can have separate rules and often receive different retirement benefit treatment. This calculator applies a ₹20 lakh cap for the displayed payable amount and tax-exempt amount for private-sector planning. For senior roles with high salary and long tenure, consult payroll or a tax adviser.
Is gratuity taxable in India?
Gratuity taxation depends on whether the employee is a government employee, covered by the Payment of Gratuity Act, or not covered. Government gratuity can be fully exempt under specific rules. For private employees, exemption is generally limited to the least of actual gratuity received, the statutory/tax exemption limit, and the formula-based amount. Amounts above the exempt limit can be taxable as salary income. This calculator highlights the ₹20 lakh planning threshold, but final tax treatment should be checked with payroll, Form 16, and a qualified tax professional before filing the return.
What happens to gratuity if an employee dies or is disabled?
If an employee dies or becomes disabled due to accident or disease, gratuity can become payable even if five years of service have not been completed. The amount is usually paid to the nominee or legal heir in case of death. Employers may need nomination records, death certificate, disability documentation, bank details, and claim forms. This exception exists because gratuity is a social security benefit, not merely a voluntary reward. The exact process depends on employer records and applicable law. Families should contact HR quickly and keep all employment documents available.