How is Gratuity calculated?

Gratuity is calculated using the formula: Gratuity = (15 × Last Drawn Basic Salary + DA × Tenure in Years) / 26.

Is Gratuity tax-free in India?

Yes, gratuity received up to ₹20 Lakhs is completely tax-exempt for covered employees under Section 10(10) of the Income Tax Act.

What happens if an employee dies before completing 5 years?

In the event of death or disablement of an employee, the 5-year minimum continuous service rule does not apply, and full gratuity is paid to the nominee or legal heir.

Is 4 years 7 months of service eligible for Gratuity?

Standard rules require 5 continuous years. However, service of 4 years and 240 days (approx. 4 years 8 months) in a 6-day working week establishment has been ruled eligible by judicial precedents.

Gratuity Calculator

Calculate Employee Gratuity Payout & Tax Exemption Online

Calculate your eligible gratuity payout after completing 5+ years of continuous service under the Payment of Gratuity Act, 1972.

100% Free Tool 15/26 Formula Rule ₹20 Lakh Tax Free Limit

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Gratuity Benefit 5+ Years Service

Last Drawn Basic Salary + DA (₹)

₹

Years of Service (Years)

Yrs

Gratuity Result

Total Gratuity Payable (15/26 Formula Rule)

₹2,88,462

Tax-Exempt Limit (Sec 10(10)): ₹20,00,000

Taxable Gratuity: ₹0 (Tax Free)

What is Gratuity in India?

Gratuity is a lump-sum monetary benefit paid by an employer to an employee as a token of appreciation for completing 5 or more years of continuous service in an organization under the Payment of Gratuity Act, 1972.

Gratuity Calculation Formula

Gratuity = (15 × Last Basic Salary + DA × Tenure Yrs) ÷ 26

• 15: Represents 15 days of salary per year

• 26: Working days per month (excluding 4 Sundays)

Frequently Asked Questions (FAQs)

Useful Tip: If your tenure includes additional months exceeding 6 months (e.g. 7 years 7 months), it rounds up to the next full year (8 years)!

Disclaimer & Important Notice

This online Gratuity calculator is provided strictly for educational and informational purposes only. Gratuity eligibility for non-covered establishments or government employees may vary according to specific service rules. Please consult your HR department or Legal counsel for official calculations.

Gratuity Calculator

Gratuity Result

What is Gratuity in India?

Gratuity Calculation Formula

Frequently Asked Questions (FAQs)

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