What is Gratuity Calculator?
A Gratuity Calculator helps employees calculate gratuity amount payable upon resignation, retirement, or termination after 5 years of continuous service. Gratuity is calculated as (Last Salary × Years of Service × 15) / 26 for private sector and /30 for government employees, with a maximum limit of ₹20 lakhs. Know your exact gratuity entitlement based on the Payment of Gratuity Act 1972, plan your retirement corpus, and understand tax implications under Section 10(10)!
Formula
Private Sector: Gratuity = (Last Drawn Salary × Years of Service × 15) / 26
Government: Gratuity = (Last Salary × Years × 15) / 30
Last Salary = Basic + DA
Maximum Limit: ₹20,00,000
Minimum Service: 5 years (4.5 years for death/disability)
Benefits of Using Gratuity Calculator
Accurate Calculation – Private vs government sector formulas
5-Year Eligibility – Know if you qualify for gratuity
₹20L Cap Applied – Automatic maximum limit calculation
Tax Calculation – Section 10(10) exemption for non-govt employees
Retirement Planning – Estimate lump-sum on retirement
Free & Updated – As per Gratuity Act amendments 2025
Pro Tip: Gratuity is TAX-FREE for government employees! For private sector: ₹20L is tax-free, amount above ₹20L is taxable. If you resign before 5 years, you lose gratuity (exceptions: death, disability). Some companies voluntarily pay gratuity before 5 years!
Frequently Asked Questions
Formula: (Basic + DA) × Years of Service × 15 / 26. Example: ₹50,000 salary, 10 years service. Gratuity = (50,000 × 10 × 15) / 26 = ₹2,88,461. For every year of service, you get roughly 0.58 months of last salary!
5 years continuous service (4 years 240 days also eligible). Exceptions: If employee dies or becomes disabled, gratuity is paid even if service <5 years. Job changes = gratuity resets (unless same group companies)!
Maximum: ₹20,00,000 (increased from ₹10L in 2010). Even if formula gives ₹25L, you get only ₹20L. Some companies pay "Ex-gratia" above ₹20L voluntarily, but it's taxable as salary!
Government employees: 100% tax-free. Private sector: MINIMUM of (1) ₹20L, (2) Actual gratuity, (3) Eligible gratuity is tax-free. Amount beyond is taxable. For ₹25L gratuity: ₹20L tax-free, ₹5L taxable as salary!
NO (in most cases). You need 5 years continuous service. Exceptions: Death, permanent disability = gratuity payable. Some liberal companies pay gratuity at 3-4 years as goodwill gesture, but it's not legally mandatory!
Example: ₹60,000 basic + DA, 20 years. Gratuity = (60,000 × 20 × 15) / 26 = ₹6,92,307. But if formula gives >₹20L, you get exactly ₹20L (capped). This is a significant retirement corpus!