Applies to Private Sector only. Central/State Government employees are governed by the CCS Pension Rules instead, and this toggle is ignored for them.
| Gratuity as per formula | ₹ 0 |
| Statutory / tax-free cap | ₹ 20,00,000 |
| Ex-gratia (above cap) | ₹ 0 |
| Tax-exempt amount | ₹ 0 |
| Taxable gratuity | ₹ 0 |
Where an employer is not covered under the Act, the divisor changes to 30 instead of 26. The 26 stands in for assumed working days in a month; 15 is half a month's wages payable per year served.
Government employees aren't covered by the Payment of Gratuity Act at all — they're governed by the CCS (Pension) Rules instead, with service measured in six-monthly periods (SMPs), capped at 66 SMP (33 years). Requires 5 years' qualifying service, same as the private-sector rule.
Paid to the family/nominee if a Government employee dies in service — a service-length slab of Emoluments, usually larger than the retirement formula. All Government gratuity is subject to the same ₹25,00,000 overall ceiling.
A handful of statutory conditions decide whether — and how much — gratuity is payable.
Continuous service of at least 5 years is required, waived entirely in cases of death or permanent disablement, where gratuity is paid on actual years served. The same waiver principle applies to Central & State Government employees under the CCS Pension Rules — though their payout uses a different formula (¼ × emoluments × 6-monthly periods) than shown here.
If the leftover period in the final year exceeds 6 months, it rounds up to the next full year; 6 months or less does not round up.
Private-sector gratuity is capped at ₹20,00,000; Central and State Government employees are capped at ₹25,00,000. Any excess is ex-gratia, at employer discretion.
Only Basic salary + Dearness Allowance (DA) count toward the gratuity base — HRA, bonus, commission and other allowances are excluded.
The Act applies to establishments with 10 or more employees at any point in the preceding 12 months, and continues to apply even if headcount later falls.
The exempt amount is the least of: actual gratuity received, the statutory formula amount, and the applicable cap. Central and State Government employees are fully exempt with no ceiling.
Gratuity is a lump-sum monetary benefit that an employer pays to an employee as a token of appreciation for the years of continuous service rendered to the organisation. Unlike a salary component that is paid every month, gratuity is a one-time payment that typically becomes due when an employee retires, resigns, is superannuated, or in the unfortunate event of death or disablement due to accident or disease. Because it can add up to a meaningful sum, especially for long-tenured employees, most people like to estimate it well in advance of an actual job change or retirement.
In India, gratuity paid by most employers is governed by the Payment of Gratuity Act, 1972. Any establishment that employs 10 or more people on any day in the preceding 12 months automatically falls under the ambit of this Act, and once covered, it continues to remain covered even if the headcount later falls below 10. To become eligible for gratuity, an employee generally needs to complete at least 5 years of continuous service with the same employer — the only exceptions to this rule are when service is cut short by the employee's death or permanent disablement, in which case the 5-year requirement is waived and gratuity is paid out regardless of tenure.
This Gratuity Calculator lets you quickly estimate the amount you (or an employee) would be entitled to, based on your last drawn monthly salary, years of service, and whether your employer is covered under the Act. It is a handy tool for retirement planning, negotiating a full and final settlement while switching jobs, or simply understanding one more piece of your overall compensation and retirement corpus.
For employees covered under the Payment of Gratuity Act, 1972, gratuity is calculated using the formula: (15 × Last Drawn Monthly Salary × Years of Service) ÷ 26, where 26 represents the assumed number of working days in a month. For employees NOT covered under the Act (typically those working for employers with fewer than 10 staff, though many such employers pay gratuity voluntarily on similar terms), the formula instead uses a divisor of 30 days, i.e. (15 × Last Drawn Monthly Salary × Years of Service) ÷ 30. In both cases, "Last Drawn Monthly Salary" refers to Basic pay plus Dearness Allowance (DA) only, excluding other allowances. Regardless of which formula applies, the law currently caps the total tax-exempt and payable gratuity amount at ₹20,00,000 (twenty lakh rupees) — any amount computed above this ceiling is capped at ₹20,00,000.
