Gratuity Calculator – Calculate Your Gratuity Amount in India

Use this gratuity calculator to estimate how much gratuity you will receive based on your last drawn basic salary and years of service, as per Indian labour laws.

Gratuity Calculator – India

Calculate your gratuity amount based on the latest Indian gratuity rules.

Note: Gratuity is tax-free up to ₹20 lakhs (lifetime limit). Final payout depends on employer policy and eligibility.

How is gratuity calculated in India?

Gratuity is calculated using the formula:

(Last Drawn Basic Salary × 15 × Years of Service) ÷ 26

Employees become eligible for gratuity after completing at least 5 years of continuous service. Service of 6 months or more is rounded up to the next full year.

Gratuity is tax-free up to ₹20,00,000 (lifetime limit) under current income tax laws.

Who is Eligible for Gratuity in India?

An employee becomes eligible for gratuity under the Payment of Gratuity Act, 1972 after completing at least 5 years of continuous service with the same employer.

Eligibility Conditions

• The employee must have completed 5 years of continuous service.
• The company must employ 10 or more employees.
• Gratuity becomes payable on retirement, resignation, death, or permanent disability.

Important Exceptions

• The 5-year rule does not apply in case of death or permanent disability.
• In many cases, 4 years and 240 days is considered equivalent to 5 years.

Continuous service includes uninterrupted service, including leave, sickness, accident, maternity leave, or absence not treated as break in service.

Is Gratuity Included in CTC?

Yes, many companies include gratuity as part of your Cost to Company (CTC). However, it is important to understand that gratuity is not part of your in-hand salary.

How is Gratuity Shown in CTC?

Employers typically calculate gratuity as 4.81% of your basic salaryand include it in your annual CTC structure.

This amount is set aside by the employer but is paid to you only if you meet the eligibility criteria under the Payment of Gratuity Act.

Important Points to Remember

• Gratuity is part of CTC but not part of monthly take-home salary.
• It becomes payable after completing at least 5 years of service (with exceptions).
• If you leave before eligibility, the gratuity component is not paid.

To understand how gratuity affects your overall salary structure, you can also calculate your take-home salary using our CTC to In-Hand Salary Calculator.

Is Gratuity Taxable in India (2026)?

Gratuity is partially tax-exempt under the Income Tax Act, depending on your type of employment and the amount received.

1. Government Employees

Gratuity received by Central or State Government employees is fully tax-exempt.

2. Private Sector Employees (Covered Under Gratuity Act)

For private employees covered under the Payment of Gratuity Act, gratuity is tax-free up to ₹20 lakh.

The tax-exempt amount is the least of:

• Actual gratuity received
• ₹20 lakh (current maximum limit)
• (Last drawn salary × 15 × years of service) ÷ 26

3. Private Employees (Not Covered Under Gratuity Act)

If your employer is not covered under the Gratuity Act, the exemption is calculated as the least of:

• Actual gratuity received
• ₹20 lakh
• Half month's average salary for each completed year of service

Is Excess Gratuity Taxable?

Any amount exceeding the tax-free limit of ₹20 lakh is taxable as per your income tax slab.

You can compare your overall tax impact using our Old vs New Tax Regime Calculator.

Gratuity Calculation Chart (2026)

The table below shows estimated gratuity amounts for different basic salaries and years of service, calculated using the standard formula:

(Basic Salary × 15 × Years of Service) ÷ 26

These values assume the employee is covered under the Payment of Gratuity Act and has completed full years of service.

Use the calculator above to get an exact gratuity amount based on your salary and years of service.