Free Gratuity Calculator

Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for their service at retirement, resignation, or death/disability. It is governed by the Payment of Gratuity Act, 1972.

Gratuity = (Last drawn Basic + DA × 15 ÷ 26) × Years of Service. The number 15 represents 15 days' salary for each year of service, and 26 represents working days in a month (excluding 4 Sundays).

An employee must complete a minimum of 5 years of continuous service to be eligible for gratuity. However, in case of death or disability, gratuity is paid regardless of the service period.

As per the latest amendment (2019), gratuity up to ₹20 lakhs is exempt from income tax. Any amount exceeding ₹20 lakhs is taxable as per the employee's income tax slab.

The Gratuity Act (covering companies with 10+ employees) uses ÷26 (working days per month). Non-covered organizations and government entities may use ÷30 (calendar days). The ÷26 formula gives a higher gratuity amount.

Yes, in most companies, the employer's gratuity provision (4.81% of basic salary) is included in the CTC (Cost to Company). This is an accrual — you receive the actual gratuity amount only at the time of separation.