Gratuity Calculator (India)
Calculate gratuity under the Payment of Gratuity Act, 1972 with the 15/26 formula and ₹20 lakh tax-exempt cap.
Last updated: August 2026
Include dearness allowance if applicable.
A year counts as full when you have served 6+ months beyond the completed year, as per the Payment of Gratuity Act, 1972. Minimum eligibility: 5 years.
Gratuity
₹3,00,000
Service counted
13 years
Full gratuity
Tax status
Tax-free
Up to ₹20L is exempt
Formula: years of service × last drawn salary × 15 ÷ 26. Tax exemption limit is ₹20,00,000 for non-government employees; anything above that is taxable as per your slab.
How it works
Gratuity = last drawn salary × years of service × 15 ÷ 26. Exempt up to ₹20,00,000.
Example: ₹40,000 salary, 13 years → 40000 × 13 × 15 ÷ 26 = ₹3,00,000.
Frequently Asked Questions
How is gratuity calculated in India?
For non-government employees covered by the Payment of Gratuity Act, 1972: gratuity = last drawn salary (basic + DA) × years of service × 15 ÷ 26. A year counts once you complete 6+ months beyond it, and you need at least 5 years of continuous service to qualify.
Is gratuity tax-free?
Up to ₹20,00,000 is exempt from tax under section 10(10) of the Income Tax Act. Anything above the cap is taxable as per your income slab. For government employees, the entire gratuity is tax-free.
What if my employer does not come under the Gratuity Act?
If the Act does not cover you, the employer usually follows a half-month-salary-per-year formula: salary × years × 15 ÷ 30. The tax exemption still applies up to ₹20 lakh, but the payable gratuity depends on the company policy.
Is gratuity paid on resignation or only retirement?
Gratuity is payable on retirement, resignation, retrenchment, death or disability — as long as you have completed 5 years of continuous service. On death or disability, the 5-year condition is waived.