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Gratuity Calculator

Minimum 5 years required for eligibility.

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How to use the Comprehensive Guide to Gratuity in India

Gratuity is a monetary benefit given by the employer to the employee for rendering services for a continuous period of 5 years or more. It is a statutory right, not a gift, mandated by the Payment of Gratuity Act, 1972. Use this tool to calculate your payout instantly.

🛡️ The ₹20 Lakh Limit

As per the latest amendment, gratuity income up to ₹20 Lakhs is completely tax-free for private sector employees. For government employees, the entire amount is tax-exempt.

📉 The 7-Year Myth

Many believe you need 7 years. False. You only need 5 continuous years of service to be eligible. (In case of death/disability, this rule is waived).

The Formula

Gratuity = (Basic + DA) × 15/26 × Years of Service

Eligibility & Exceptions

  • Taxation: Gratuity received by government employees is fully tax-free. For private employees, it is tax-free up to ₹20 Lakhs.
  • Rounding Off: Service of more than 6 months is typically rounded up to the next year (e.g., 7 years 7 months = 8 years).
  • Forfeiture: Gratuity can be forfeited if the employee is terminated for "riotous or disorderly conduct" or causing damage to property.

Frequently Asked Questions (FAQ)

Frequently Asked Questions

Is Gratuity deducted from my monthly salary?

No, Gratuity is paid entirely by the employer. It is not a deduction like EPF. However, companies often include the accrued gratuity cost in your CTC (Cost to Company) offer letter.

What happens if I work for 4 years and 11 months?

Unfortunately, you are generally not eligible. Some specific court rulings have allowed rounding up from 4 years 240 days, but employers strictly follow the 5-year norm.

Is Gratuity taxable?

For government employees, it is fully tax-free. For private sector employees covered under the Act, it is tax-free up to ₹20 Lakhs. Any amount above this limit is taxable.