Gratuity Calculator
Gratuity is a statutory lump-sum payment under the Payment of Gratuity Act 1972 — not a discretionary bonus. Enter your salary and years of service to instantly get your gross gratuity, exempt portion, taxable portion, and net amount, across four modes including a reverse calculator.
✓ No signup · ✓ Four calculation modes · ✓ Tax breakdown included
Gratuity Calculator
Gratuity Calculation Formula
Two formulas, depending on whether you're covered under the Payment of Gratuity Act 1972.
Covered Under the Act
Not Covered Under the Act
How Can a Gratuity Calculator Help You?
Removes the manual math — and the mistakes that come with it.
Accurate, Instant Results
No manual arithmetic, no wrong divisor — the exact statutory formula applied every time.
Know Your Net Payout
See gross gratuity, the tax-exempt portion, and the taxable portion broken out separately.
Plan Ahead
Estimate your gratuity years before retirement or resignation to plan your finances with confidence.
Employer Liability Planning
HR and payroll teams can estimate total gratuity obligations across their workforce.
Reverse Target Planning
Find out exactly how many more years of service you need to reach a target gratuity amount.
Custom Company Policies
Model gratuity under a company's own multiplier and working-day assumptions, not just the statutory minimum.
Taxation Rules for Gratuity
Not all gratuity is tax-free — here's where the line sits.
For employees covered under the Payment of Gratuity Act, gratuity is tax-exempt up to a statutory limit — currently ₹20,00,000 (twenty lakh rupees) in India. Any amount received above this limit is taxable as income under "Income from Salary." Government employees generally receive full tax exemption on gratuity regardless of amount, while private-sector employees are subject to the statutory cap.
The exemption limit is periodically revised by the government, so it's worth confirming the current figure before relying on an old number. This calculator's exemption limit field is adjustable for exactly that reason — enter the applicable limit and the breakdown between exempt and taxable portions updates automatically.
Frequently Asked Questions
Common questions about gratuity eligibility, calculation and tax.
What is gratuity?
Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for continuous service, typically paid on retirement, resignation after five years, or termination.
Who is eligible for gratuity?
Under the Payment of Gratuity Act 1972 (India), an employee who has completed at least five years of continuous service is eligible. Exceptions exist for death or disability, where the five-year threshold does not apply.
How is gratuity calculated?
For employees covered under the Act: Gratuity = (15 × Last Drawn Salary × Eligible Years) ÷ 26. For those not covered: Gratuity = (15 × Last Drawn Salary × Service Years) ÷ 30.
Is Dearness Allowance included in gratuity?
Yes. Under the Payment of Gratuity Act, Last Drawn Salary for gratuity purposes is defined as Basic Salary plus Dearness Allowance (DA). Other allowances like HRA and bonuses are typically excluded.
What is the gratuity tax exemption limit?
In India, the statutory tax-exempt gratuity limit is ₹20,00,000 (twenty lakh rupees) for employees covered under the Gratuity Act. Any amount above this is taxable as income. The limit is periodically revised by the government.
What happens if I resign before five years?
Employees who resign before completing five years of continuous service are generally not entitled to statutory gratuity under the Act. However, some companies have their own policies that pay a proportion of gratuity for shorter tenures.
Can employers pay more than the statutory gratuity?
Yes. Employers may pay gratuity exceeding the statutory formula as an ex-gratia benefit. The statutory amount is the minimum obligation; amounts above this are voluntary and treated as ex-gratia payments.
Can private companies use this calculator?
Yes. The calculator supports both the statutory Gratuity Act formula and a Custom Company Formula mode, allowing private companies to enter their own multiplier and working-day assumptions.
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