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EPF Calculator
Estimate your total retirement package by combining EPF and Gratuity returns.
Gratuity Calculator
Gratuity Calculator — Gratuity Amount After 5 Years
Calculate your gratuity payout based on the Payment of Gratuity Act 1972 rules.
Last Drawn Salary (Monthly Basic + DA)
Years of Service
Additional Months
Is organization covered under Gratuity Act?
Estimated Gratuity
₹ 1,44,231
Eligibility statusEligible (Completed 5+ years)
Tax exemption statusFully Tax-Exempt
Formula: 15 * Salary * Years / 26
Disclaimer
The calculations provided by this tool are for informational and educational purposes only and do not constitute professional financial advice. While we strive to ensure accuracy, actual returns, tax liabilities, or loan terms may vary based on market conditions, institution policies, and regulatory changes. Please consult a qualified financial advisor before making any significant financial decisions.
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Quick Start Instructions
Enter last basic salary plus DA and years of service. Handles both Gratuity Act (15/26) and non-covered employer formula. Instant result, no signup needed.
- 1Enter last drawn basic monthly salary plus Dearness Allowance (DA).
- 2Input years of continuous service in the organization.
- 3Select whether organization is covered under the Gratuity Act.
- 4View estimated gratuity amount and tax-free limit (₹20 Lakhs) instantly.
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Frequently Asked Questions
What is gratuity and who is eligible?
Gratuity is a monetary reward given by an employer to an employee for services rendered. In India, employees who have completed at least 5 years of continuous service in an organization with 10 or more employees are eligible for gratuity.
What is the formula for employees covered under the Gratuity Act?
For employees covered under the Payment of Gratuity Act, 1972, the formula is: Gratuity = (15 * Last Drawn Basic Salary + DA * Years of Service) / 26.
What is the formula for employees NOT covered under the Gratuity Act?
For employees not covered under the Act, the formula is: Gratuity = (15 * Last Drawn Basic Salary + DA * Years of Service) / 30. Note that the years of service are rounded down to the completed years.
Is there a limit on tax-free gratuity in India?
Yes, the maximum tax-free gratuity amount allowed under the law is ₹20 Lakhs (which was increased from ₹10 Lakhs). Any gratuity received exceeding this limit is taxable.
Detailed Guide & Overview
Gratuity Calculator: Know Your Rightful End-of-Service Benefit
Gratuity is a statutory benefit paid by an employer to an employee as recognition of long service, governed by the Payment of Gratuity Act, 1972. It is payable when an employee leaves after completing a minimum of 5 years of continuous service — whether through resignation, retirement, death, or disablement. Our Gratuity Calculator computes your entitled amount accurately based on your last drawn salary and years of service.
Gratuity Calculation Formula Explained
For employees covered under the Payment of Gratuity Act (organisations with 10+ employees):
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26
Where "Last Drawn Salary" = Basic Salary + Dearness Allowance (DA), "15" represents 15 days' salary per year of service, and "26" represents the number of working days per month (as per the Act). Partial years of service of 6 months or more are rounded up to the next full year.
Example: Employee with ₹50,000 Basic+DA leaving after 8 years and 7 months (rounded to 9 years): Gratuity = (50,000 × 15 × 9) ÷ 26 = ₹2,59,615.
Tax Exemption on Gratuity
Gratuity is exempt from income tax up to a limit of ₹20 lakh (raised from ₹10 lakh in 2019). For government employees, the entire gratuity amount is tax-free regardless of amount. For private sector employees covered by the Gratuity Act, tax exemption is the minimum of:
- Actual gratuity received
- ₹20,00,000 (₹20 lakh)
- 15 days' salary for each year of service (the formula amount)
Gratuity received beyond the exempt limit is taxable as "Income from Salaries" in the year of receipt.
5-Year Minimum Service Requirement
Generally, gratuity is payable only if the employee has completed continuous service of at least 5 years. In cases of death or disablement, the 5-year requirement is waived and gratuity is paid to the nominee or legal heir.
Gratuity vs Provident Fund vs Leave Encashment
These are distinct end-of-service benefits:
- Gratuity: Paid by employer from company funds. Based on salary and service. Statutory under the Gratuity Act.
- EPF (Employee Provident Fund): Accumulated from monthly contributions (12% of basic from both employee and employer). Portable across employers.
- Leave Encashment: Payment for unused earned leave at the time of separation. Taxable except for central government employees.