Employees with at least five years of continuous service are entitled to gratuity on leaving or retiring (five-year condition relaxed for death or disability). Gratuity up to ₹20 lakh is tax-exempt for private-sector employees.
How to use the Gratuity Calculator
- Last drawn salary (basic + DA) per month
- Years of service
- Additional months
- Employer covered by the Payment of Gratuity Act
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter your last monthly basic salary plus dearness allowance, years and months of service, and whether your employer is covered by the Act.
Tips
- Tax figures here are estimates for planning – your actual tax depends on credits, deductions and local rules.
- Check the tax year and filing status before you rely on a result.
- Use gross (before-tax) figures unless a field asks for take-home pay.
- When in doubt, confirm with the tax authority’s own calculator or a tax professional.
Common mistakes to avoid
- Confusing marginal and effective tax rates.
- Adding sales tax to a price that already includes it.
- Forgetting payroll taxes (Social Security and Medicare) on wages.
Inputs explained
| Field | What to enter |
|---|---|
| Last drawn salary (basic + DA) per month | Amount in ₹ |
| Years of service | A number |
| Additional months | A number |
| Employer covered by the Payment of Gratuity Act | Choose one: Yes, No |
What each result means
- Tax-exempt part (₹20 lakh limit) = min([Gratuity amount], 2000000)
- Taxable part = [Gratuity amount] – [Tax-exempt part (₹20 lakh limit)]
Example values
How the main result changes when Last drawn salary changes and everything else stays at the example values above:
| Last drawn salary (basic + DA) per month | Gratuity amount |
|---|---|
| 30,000 | 225,000 |
| 45,000 | 337,500 |
| 60,000 | 450,000 |
| 75,000 | 562,500 |
| 90,000 | 675,000 |
| 120,000 | 900,000 |
Formula
Covered by the Act: gratuity = 15 × last salary (basic + DA) × years of service ÷ 26Not covered: 15 × salary × completed years ÷ 30Service of more than 6 months in the final year counts as a full yearWorked example
Inputs — Last drawn salary (basic + DA) per month: ₹60,000; Years of service: 12; Additional months: 7; Employer covered by the Payment of Gratuity Act: Yes.
Results — Years counted = 13; Gratuity amount = ₹450,000.00; Tax-exempt part (₹20 lakh limit) = ₹450,000.00; Taxable part = ₹0.00.
Frequently asked questions
Who is eligible for gratuity?
Employees with at least 5 years of continuous service (not required on death or disablement).
Why divide by 26?
The Act assumes 26 working days in a month.
Is gratuity taxable?
Up to ₹20 lakh is exempt for private-sector employees.
What formula does the Gratuity Calculator use?
Covered by the Act: gratuity = 15 × last salary (basic + DA) × years of service ÷ 26.