Gratuity Calculator
💡Tip: Gratuity rules are full of surprises! Want to know hidden facts, eligibility tricks, and how to maximize your payout? Read our Gratuity Guide for everything you did not know about retirement benefits.
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Total Gratuity:
₹0
Gratuity Calculation Formula
For Government/Private Employees (Covered under Gratuity Act): Gratuity = (15 × Last Drawn Salary × Years of Service) / 26
For Non-Covered Employees: Gratuity = (15 × Last Drawn Salary × Years of Service) / 30
Your Calculation:
- Rounded years of service = 15.6 → 16 (since months > 6)
- Formula applied: (15 * Last Drawn Salary * Years of Service) / 26
- Calculation: (15 * 30000 * 16) / 26 = ₹0
Note: If your service in the last year is more than 6 months, it is rounded up to the next year. Maximum gratuity payable is ₹20 lakh.
Taxation Rules for Gratuity
Understanding how your gratuity is taxed can help you maximize your retirement benefits and avoid surprises at tax time.
For Government employees, the entire gratuity amount is tax-exempt.
For other employees, the tax-exempt amount is the lowest of: ₹20 lakh, actual gratuity received, or eligible gratuity calculated.
Tax-Exempt Gratuity:₹0
Taxable Gratuity:₹0
Note: The maximum tax-exempt gratuity you can claim in your entire working life cannot exceed ₹20 lakh.
Government Gratuity Slab Rates
| QUALIFYING SERVICE | RATE |
|---|---|
| Less than 1 year | 2 times of basic pay |
| 1 year or more but less than 5 years | 6 times of basic pay |
| 5 years or more but less than 11 years | 12 times of basic pay |
| 11 years or more but less than 20 years | 20 times of basic pay |
| 20 years or more | Half of emoluments (Basic + DA) for every completed 6 monthly period, subject to maximum of 33 times of emoluments |
What Most People Miss About Gratuity
- 🏢 Lifetime ₹20L Tax-Free Limit: The ₹20 lakh exemption is not per job, but for your entire career. If you switch companies and get gratuity more than once, all payouts are added up for this limit. Anything above is fully taxable.
- ⏳ Notice Period Counts (If Served!): Your notice period is included in your gratuity tenure only if you actually serve it. If you leave early or the company waives it, those days do not count for eligibility.
- 📅 "Continuous Service" Has Legal Exceptions: Breaks due to illness, accident, strike, or even unpaid leave often still count as service under Section 2A. Do not let HR tell you otherwise!
- 🚫 Part-Time, Interns & Contractors Not Eligible: Only full-time employees are covered by the Act. Interns, freelancers, and contract workers do not get gratuity unless your contract says so—even if you work 5+ years.
- 🧮 Why 26 in the Formula? The divisor 26 represents actual working days in a month (not calendar days). For non-covered employers, the divisor is 30, assuming the whole month.
- 💀 No 5-Year Rule for Death/Disability: If an employee dies or is disabled, gratuity is paid immediately—no minimum years required, no matter the cause.
- 👩⚖️ Legal Right, Even If Not Paid: Did not get your gratuity? You can legally claim it within 5 years, and the employer must pay 10% simple interest if they delay without a valid reason.
- ⏱️ Rounding Rule for Service: If your last year is 6 months or less, it is ignored. But 6 months and 1 day or more? You get a full extra year in the calculation!
- 💵 Gratuity Can Be Higher Than Formula: Some generous employers pay more than the legal formula (called “ex-gratia”). But remember, the extra is fully taxable.
Pro Tip: Check your state’s rules and keep your HR records updated—small details can make a big difference in your payout!