- Gratuity payable
- —
- Tax-free portion
- —
- Taxable portion
- —
- Eligibility
- —
Figures are estimates for planning only, not investment or tax advice.
Gratuity is a lump sum an employer pays for long service, normally after five continuous years. This calculator applies the statutory formula and shows how much of the payout is tax-free.
The formula
For employers covered by the Payment of Gratuity Act: Gratuity = 15 ÷ 26 × last drawn monthly salary × years of service, where salary is basic plus DA and any part-year over six months counts as a full year. For employers not covered, the fraction is 15 ÷ 30 and part-years are ignored.
Tax treatment
For private-sector employees the exemption is the least of the statutory formula amount, the actual gratuity received, and a lifetime ceiling of ₹20 lakh. Government employees receive gratuity entirely tax-free.
Frequently asked questions
Do I get gratuity before five years?
Only if service ends through death or disablement, in which case the five-year condition is waived.
Does 4 years and 8 months count as five?
Courts have held that it does where the employer is covered by the Act, since the final year exceeds six months.
Is the ₹20 lakh ceiling per employer?
No, it is a lifetime limit across all employers.