Gratuity Calculator

Gratuity = (15 × Last Drawn Salary × Years of Service) / 26. Here, Last Drawn Salary = Basic Pay + Dearness Allowance. The divisor 26 represents working days in a month. Minimum 5 years of continuous service is required.

The maximum gratuity limit is ₹25,00,000 (₹25 lakh) as per the Payment of Gratuity (Amendment) Act, 2018. Any amount exceeding this is taxable. This applies to both private and government employees.

For government employees, gratuity is fully exempt from tax up to ₹25 lakh. For private employees covered under the Gratuity Act, the least of these is exempt: actual gratuity, ₹25 lakh, or the formula amount (15/26 × salary × years). Any excess is taxable at your slab rate.

Generally no — the Payment of Gratuity Act requires a minimum of 5 years of continuous service. However, gratuity can be paid before 5 years in case of death or disability of the employee. Some companies may also offer ex-gratia payments at their discretion.

Private sector uses 26 as the divisor (working days per month): Gratuity = 15 × Salary × Years / 26. Government sector uses 30 as the divisor (calendar days): Gratuity = 15 × Salary × Years / 30. This means private sector employees get slightly higher gratuity for the same salary and tenure.