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Gratuity Calculator - Calculate Gratuity Amount Online

Calculate your gratuity amount accurately based on your last drawn salary and years of service. Get detailed breakdown under Payment of Gratuity Act 1972 with tax exemption details.

Employment Details

₹15K ₹2L
Basic salary component of your last drawn salary
₹0 ₹1L
DA forming part of retirement benefits (Enter 0 if not applicable)
5 Years 40 Years
Total completed years of continuous service
0 Months 11 Months
If ≥6 months, it counts as additional year
Establishments with 10+ employees are usually covered
Affects tax exemption limits and calculation
Used to calculate tax savings on exempt portion

Your Gratuity Calculation

Total Gratuity Amount
₹6,92,308
Within ₹20L limit
Eligible Years
16 Years
Tax Exempt Amount
₹6,92,308
Taxable Amount
₹0
Tax Savings
₹1,38,462

Detailed Gratuity Calculation

Calculation Components

Component Amount
Basic Salary (Monthly) ₹50,000
Dearness Allowance (Monthly) ₹10,000
Last Drawn Salary (Basic + DA) ₹60,000
Total Service Years 15.5 Years
Eligible Years (Rounded) 16 Years
Employer Coverage Under Gratuity Act

Gratuity & Tax Details

Particulars Amount
Calculation Formula (60,000 × 15 × 16) ÷ 26
Gross Gratuity ₹6,92,308
Maximum Cap (Private) ₹20,00,000
Tax Exempt Amount ₹6,92,308
Taxable Amount ₹0
Estimated Tax Saved ₹1,38,462

Why Our Gratuity Calculator is the Market Leader

Most Accurate Calculations

Uses exact Payment of Gratuity Act 1972 formulas with automatic rounding rules for service years above 6 months and current ₹20 lakh exemption limits.

Comprehensive Tax Analysis

Calculates both taxable and exempt portions with actual tax savings estimation - a feature missing in most other gratuity calculators available online.

Visual Growth Projection

Interactive charts showing year-wise gratuity growth and tax implications, helping you plan your retirement finances effectively.

Dual Formula Support

Automatically applies correct formula based on employer coverage (15/26 for covered vs 15/30 for non-covered employers) ensuring precision.

Real-time Updates

Always updated with latest gratuity rules, tax exemption limits, and Payment of Gratuity Act amendments for accurate results.

Mobile-First Design

Optimized for all devices with intuitive sliders and instant calculations. No registration required - completely free to use unlimited times.

Related Calculators

Gratuity Tips

  • Minimum 5 years of continuous service required for eligibility
  • Employer must pay within 30 days of becoming due
  • Service period >6 months in final year counts as full year
  • Tax exempt up to ₹20 lakh for private sector employees
  • Applies to establishments with 10 or more employees
  • Payable on retirement, resignation, death, or disability

Understanding Gratuity and Payment of Gratuity Act 1972

Gratuity is a statutory benefit provided by employers to employees as recognition for their long-term service. Governed by the Payment of Gratuity Act 1972, it serves as a financial reward and retirement benefit for employees who have dedicated years of service to an organization.

What is Gratuity?

Gratuity is a lump-sum payment made by employers to employees upon retirement, resignation, termination, death, or disability. It's calculated based on the employee's last drawn salary and years of service, providing financial security during career transitions or retirement.

Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ Working Days
Working Days: 26 for employers covered under Act | 30 for non-covered employers
Last Drawn Salary = Basic Salary + Dearness Allowance

Eligibility Criteria for Gratuity

  • Service Requirement: Minimum 5 years of continuous service with the same employer
  • Employer Coverage: Applicable to establishments with 10 or more employees
  • Employee Status: All employees including permanent, temporary, and contract workers (except apprentices)
  • Early Eligibility: Available before 5 years in case of death or disability

Gratuity Calculation Formula Comparison

Employer Type Formula Working Days Application
Covered under Act (Salary × 15 × Years) ÷ 26 26 days Establishments with 10+ employees
Not Covered (Salary × 15 × Years) ÷ 30 30 days Smaller establishments

Tax Implications of Gratuity

Gratuity taxation varies based on employee type and amount received. The Income Tax Act provides specific exemptions to reduce the tax burden on this retirement benefit.

  • Government Employees: Completely tax-free up to ₹25 lakh (increased from ₹20 lakh in 2024)
  • Private Sector (Covered): Tax-free up to ₹20 lakh under Section 10(10)
  • Private Sector (Non-covered): Tax-free up to ₹20 lakh with specific calculation method
  • Excess Amount: Any amount above exemption limit is taxable as per income tax slab

Recent Updates and Amendments

  • 2019 Amendment: Tax exemption limit increased from ₹10 lakh to ₹20 lakh for private sector
  • 2024 Update: Government employees' exemption limit raised to ₹25 lakh
  • New Wage Code: Proposes minimum 50% basic salary, potentially increasing gratuity amounts
  • Payment Timeline: Employers must pay within 30 days; failure attracts interest charges

Important Gratuity Rules

  • Service Calculation: If final year service exceeds 6 months, it's rounded up to full year
  • Maximum Limit: ₹20 lakh for private sector, ₹25 lakh for government employees
  • Nomination: Employees must nominate beneficiaries after completing one year of service
  • Portability: Not portable between employers; each employment is treated separately

Frequently Asked Questions about Gratuity Calculator

How is gratuity calculated under Payment of Gratuity Act?

Gratuity is calculated as (Last drawn salary × 15 × Years of service) ÷ 26 for employers covered under the Act. Last drawn salary includes basic salary plus dearness allowance only.

What is the minimum service required for gratuity eligibility?

Minimum 5 years of continuous service with the same employer is required. However, gratuity is payable even before 5 years in case of employee's death or disability.

What is the maximum gratuity amount I can receive?

Maximum gratuity is ₹20 lakh for private sector employees and ₹25 lakh for government employees. Any excess is considered ex-gratia and may be taxable.

Is gratuity amount fully tax-free?

Gratuity is tax-exempt up to ₹20 lakh for private sector employees under Section 10(10) of Income Tax Act. Government employees enjoy complete exemption up to ₹25 lakh.

How is the number of service years calculated?

Only completed years count towards gratuity calculation. If service in the final year exceeds 6 months, it's rounded up to the next full year for calculation purposes.

When should employers pay gratuity to employees?

Employers must pay gratuity within 30 days from the date it becomes due. Delay in payment attracts interest charges as per the Payment of Gratuity Act provisions.

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