Gratuity Calculator India 2026
Calculate your gratuity amount based on years of service and last drawn salary.
Employment Details
Your last monthly basic salary before leaving
DA as percentage of basic salary
Completed years of continuous service
Additional months (6+ months = 1 year)
Note: Minimum 5 years of continuous service is required for gratuity eligibility. Maximum payable gratuity is ₹20 lakhs.
Gratuity Payable
₹0
After 0 years of service
Calculation Breakdown
Formula Used
Gratuity = (Last Salary × Years × 15) / 26
= (₹0 × 0 × 15) / 26
= ₹0
Tax Status
Tax-Free
Gratuity up to ₹20 lakhs is completely tax-free under Section 10(10) of the Income Tax Act.
Additional Information
Understanding Gratuity
What is Gratuity?
Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered. It is governed by the Payment of Gratuity Act, 1972, and is a statutory benefit for employees who have completed at least 5 years of continuous service.
Eligibility Criteria
- Minimum 5 years of continuous service with the same employer
- Applicable to organizations with 10 or more employees
- All types of employees - permanent, contractual, temporary (if service period is met)
- Compulsory for employers to pay gratuity to eligible employees
When is Gratuity Paid?
Gratuity becomes payable in the following situations:
- Resignation: When you voluntarily leave the job after 5+ years
- Retirement: On reaching the retirement age (typically 58-60 years)
- Death: Paid to legal heirs/nominees (no minimum service period required)
- Disability: Due to accident or disease (no minimum service period required)
- Termination: If terminated after 5+ years (except in case of misconduct)
Gratuity Calculation Formula
Private Sector Employees
Gratuity = (Last Salary × Years × 15) / 26
26 represents the number of working days in a month (excluding Sundays)
Government Employees
Gratuity = (Last Salary × Years × 15) / 30
Half month's salary for each completed year of service
Last Drawn Salary includes:
- Basic salary
- Dearness Allowance (DA)
- Does NOT include: HRA, conveyance, bonus, overtime, commissions
Maximum Gratuity Limit
The maximum gratuity payable is ₹20 lakhs (increased from ₹10 lakhs in 2010). Even if your calculated gratuity exceeds this amount, you will receive only ₹20 lakhs as gratuity.
Tax Treatment of Gratuity
Gratuity up to ₹20 lakhs is completely tax-free under Section 10(10) of the Income Tax Act for:
- Government employees (Central, State, Local Authority)
- Employees covered under the Payment of Gratuity Act
Gratuity vs Pension
| Aspect | Gratuity | Pension |
|---|---|---|
| Payment Type | One-time lump sum | Monthly recurring payment |
| Eligibility | 5 years of service | Typically 10+ years |
| Coverage | Mandatory (10+ employee orgs) | Not mandatory for all |
| Tax Treatment | Tax-free up to ₹20L | Partially taxable |
How to Claim Gratuity
- Submit Form I: Application for payment of gratuity to your employer
- Provide nominee details: If not already provided during employment
- Employer verification: Employer verifies your service record and calculates gratuity
- Payment timeline: Must be paid within 30 days of becoming payable
- If delayed: Employer must pay simple interest on delayed amount
What if Company Doesn't Pay?
If your employer fails to pay gratuity within 30 days:
- Send a written notice to the employer requesting payment
- File complaint with the Controlling Authority (Assistant Labour Commissioner)
- Legal recourse: Approach Labour Court or file case under Payment of Gratuity Act
- Penalty for employer: Fine and/or imprisonment for non-payment
- Interest on delayed payment: Company must pay interest on the gratuity amount
Frequently Asked Questions
1. Can I get gratuity if I resign before 5 years?
No, you need a minimum of 5 years of continuous service to be eligible for gratuity. However, in case of death or disability, gratuity is payable even if the service period is less than 5 years.
2. Is gratuity payable if I'm terminated?
Yes, gratuity is payable even in case of termination, provided you have completed 5 years of service. However, if you're terminated due to any act involving moral turpitude, disorderly conduct, or violence, gratuity may be forfeited.
3. How are months calculated for gratuity?
If you have worked for 6 months or more in a year, it is rounded up to 1 full year. For example, 10 years and 8 months = 11 years for gratuity calculation. Less than 6 months is not counted.
4. Is gratuity applicable for startups with less than 10 employees?
The Payment of Gratuity Act applies to organizations with 10 or more employees. However, once an organization crosses 10 employees, the Act applies to all employees, including those who joined when the company had fewer than 10 employees.
5. What happens to gratuity if I change jobs within the same company group?
If you transfer between companies within the same group/holding company, and the transfer is recognized by the employer, your service period may be considered continuous for gratuity purposes. This depends on company policy and should be verified with HR.
6. Can gratuity be denied by the employer?
No, gratuity is a statutory right and cannot be denied if you meet the eligibility criteria. Employers can only forfeit gratuity if the employee is terminated for willful negligence, criminal acts, or acts of violence. Even partial forfeiture must be justified.
7. Is gratuity different from provident fund (PF)?
Yes, they are different. Provident Fund (EPF) is a monthly contribution by both employer and employee towards retirement savings. Gratuity is a one-time payment by the employer only, based on years of service. You're eligible for both separately.
8. What if my company shuts down? Will I get gratuity?
Yes, gratuity is a legal liability. Even if the company shuts down, they must pay gratuity to all eligible employees. If the company refuses, you can file a complaint with the Labour Commissioner. Gratuity claims are given priority in insolvency proceedings.
9. Do I need to pay tax on gratuity received?
For government employees and employees covered under the Payment of Gratuity Act, gratuity up to ₹20 lakhs is completely tax-free. Any amount exceeding ₹20 lakhs will be taxable as salary income.
10. Can I get gratuity from multiple employers?
Yes, if you've worked with multiple employers and completed 5 years with each, you can claim gratuity from all of them separately. Each employer calculates based on your last drawn salary and service period with them. The ₹20 lakh tax exemption is aggregate across all employers in a financial year.