Calculate gratuity per Payment of Gratuity Act 1972. Both formulas, tax-free cap (₹20L private / ₹25L govt), eligibility check with 4-year-240-day rule.
Gratuity Calculator Features
- Both Formulas — Covered (× 15/26) or not covered (× 15/30) — pick the right Act treatment.
- Tax-Free Cap — Auto-applies ₹20 L (private) or ₹25 L (govt) cap and shows taxable excess.
- Eligibility Check — Flags the 5-year rule with the 4-year-240-day exception (Madras HC, Mettur Beardsell).
- 100% Private — Salary and tenure stay in your browser — no upload, no signup.
How to Use Gratuity Calculator
Salary + tenure → an honest gratuity number in four steps.
- Pick Coverage — Are you covered under the Payment of Gratuity Act 1972? Most private-sector employees are.
- Enter Salary — Last drawn Basic + DA per month — the slab the formula uses (not your full CTC).
- Enter Tenure — Years and months of completed service. Tool rounds half-years per the Act's rules.
- See the Number — Total gratuity, tax-free portion, taxable excess, and an honest eligibility breakdown.
Frequently Asked Questions
Who is eligible for gratuity in India?
Any employee who has completed 5 years of continuous service with the same employer. The Payment of Gratuity Act 1972 covers any establishment with 10+ employees — factories, mines, oilfields, plantations, ports, railways, shops, and offices. There's a famous exception: the Madras High Court (Mettur Beardsell) ruled that 4 years + 240 days in the 5th year also counts as eligible.
What's the gratuity formula in India?
If covered under the Act: Gratuity = (Last Basic + DA) × 15 ÷ 26 × Completed Years. If not covered: × 15 ÷ 30. The 26 vs 30 difference reflects 'working days' vs 'calendar days' in a month. Half-years above 6 months count as a full year for covered employees only.
What's the tax-free limit on gratuity?
Under Section 10(10) of the Income Tax Act: ₹20 lakh for private-sector employees (raised from ₹10 L in 2019), ₹25 lakh for central / state / local-body government employees (effective March 2024). Anything above the cap is taxed at your slab rate as 'income from salary'.
Is gratuity calculated on Basic + DA or full CTC?
Basic + Dearness Allowance only — not gross salary, not full CTC. HRA, conveyance, performance bonus, special allowances, and PF contributions don't count. Check your latest payslip for the Basic and DA line items.
How does the 4-year-240-day exception work?
Per the Madras HC's interpretation in the Mettur Beardsell case, an employee who has completed 4 years and 240 days in the 5th year is treated as having 5 years of continuous service. So 4 years 8 months might qualify under the exception (240 days ≈ 8 months). The exact qualification depends on whether the 240 days fall within the 5th year specifically.
Can my employer deny gratuity if I resigned?
No. Gratuity is payable on resignation, retirement, termination (except for misconduct), death, or disablement. If you've completed 5 years of continuous service, the employer must pay within 30 days of the date it becomes payable. Late payment attracts simple interest at 10% per annum.
Will the calculator's number match what HR pays?
Yes for the formula portion. HR may add or deduct: (a) ex-gratia / loyalty bonus on top, (b) any unauthorised absence days subtracted from tenure, (c) employer-specific 'company gratuity' that goes beyond the Act. The base statutory amount in the calculator is the legal floor.
Does gratuity also need TDS deduction?
Only on the taxable portion (above the ₹20 L / ₹25 L cap). The tax-free portion is exempt under § 10(10). For the taxable excess, the employer deducts TDS at the applicable slab rate based on your full FY income.
Related: gratuity calculator, gratuity calculator india, gratuity formula, gratuity tax free limit, gratuity 5 years rule, gratuity 15 26 formula, section 10 10 gratuity, gratuity kaise calculate kare