Calculate your gratuity payout for private or government service with tax exemption details
Formula: (Basic+DA ÷ 26) × 15 × Years
Total Gratuity
₹2,88,462
Tax-Free Amount
₹2,88,462
Up to ₹20L exempt
Taxable Amount
₹0
100% Tax-Free
Your gratuity is within the ₹20 lakh exemption limit
Gratuity is a statutory benefit paid by an employer to an employee as a token of appreciation for long-term service. It is governed by the Payment of Gratuity Act, 1972. Gratuity is payable when an employee retires, resigns after completing 5 years of service, becomes incapacitated, or passes away.
Think of gratuity as a loyalty bonus — the longer you stay with an employer, the higher your gratuity payout. An employee who works for 25 years at a company receives significantly more gratuity than one who works for 10 years, even at the same salary.
Divisor 26 = working days in a month. 15 = days per year of service.
Divisor 30 = calendar days. Entire amount is tax-free for govt. employees.
| Basic Salary | 5 Years | 10 Years | 20 Years | 25 Years |
|---|---|---|---|---|
| ₹30,000 | ₹86,538 | ₹1,73,077 | ₹3,46,154 | ₹4,32,692 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹5,76,923 | ₹7,21,154 |
| ₹1,00,000 | ₹2,88,462 | ₹5,76,923 | ₹11,53,846 | ₹14,42,308 |
| ₹2,00,000 | ₹5,76,923 | ₹11,53,846 | ₹20,00,000* | ₹20,00,000* |
* Capped at ₹20 lakh tax-free for private employees. Amounts above ₹20L are taxable. Private sector formula used.
You are eligible for gratuity if you have completed at least 5 years of continuous service with the same employer. The Gratuity Act applies to establishments with 10 or more employees.
For private sector employees, gratuity up to ₹20 lakh is exempt from income tax. The amount above ₹20 lakh is taxable as salary income. For government employees, the entire gratuity amount is tax-free.
For the gratuity formula, "salary" means the last drawn Basic Salary + Dearness Allowance (DA). Other components like HRA, LTA, medical allowance, or incentives are NOT included in the gratuity calculation.
If you resign before completing 5 years, you are generally not entitled to gratuity. However, if you die or become permanently disabled, gratuity is payable regardless of the service period.