Calculate your gratuity entitlement as per the Payment of Gratuity Act, 1972. Minimum 5 years of service required.
Only Basic Salary + Dearness Allowance — not gross salary
Gratuity is a statutory benefit payable to employees as a recognition of their long-term service. It is governed by the Payment of Gratuity Act, 1972 (amended in 2018) and applies to all establishments employing 10 or more persons. Once an organization has 10 employees, the Act continues to apply even if the workforce falls below 10 later.
An employee is eligible for gratuity if they have completed 5 years of continuous service with the same employer. There is one exception: in case of death or permanent disability, gratuity is paid regardless of the years of service completed.
For private sector employees covered under the Act: Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service. The divisor 26 represents the number of working days in a month. For employees not covered under the Act (informally), employers sometimes use 15/30 instead.
As per the 7th Pay Commission recommendations and the notification by the Central Government in 2018, gratuity of up to ₹20 lakh is fully exempt from income tax for government employees. For private sector employees, the same ₹20 lakh ceiling applies. Any amount beyond ₹20 lakh is taxable as income from salary.