Gratuity Calculator

Estimate your gratuity payout and check the taxable portion under the Payment of Gratuity Act 1972 for FY 2025-26.

Reviewed for Budget 2025 • Last updated 21 June 2026 • by Sandesh D.

Employment Parameters

Last Drawn Monthly Salary (Basic + DA)₹50,000
Sum of Basic salary and Dearness Allowance (exclude other allowances)
₹
Years of Service15.6 Years
Total number of continuous service years (e.g. 5.6)
Covered under Payment of Gratuity Act?Applying ×15/26 organization rules (rounds up service years if >= 6 months).
Total Gratuity Payout
₹4,61,538
Tax-Free Portion (Exempt)₹4,61,538
Taxable Portion₹0
Exemption Cap Limit₹20,00,000
ℹ️ Gratuity is fully tax-free for all government employees.
ℹ️ For non-government employees, the lifetime tax-exempt gratuity cap is ₹20 Lakhs. Any excess gratuity is taxed as salary.

Calculation Methodology & Rules

The Gratuity Calculator helps you estimate the gratuity amount you are entitled to receive upon retirement, resignation, or superannuation, and determines the tax-free and taxable portions according to the Payment of Gratuity Act, 1972.

Gratuity Calculation Slabs & Formulas

CategoryFormulaYear Rounding RuleTax-free Cap
Covered under Gratuity Act(Basic + DA) × 15 × Years / 26≥ 6 months rounds up to next year₹20 Lakhs
Not Covered under ActAverage Last 10m Salary × 15 × Years / 30Completed years only (floored)₹20 Lakhs

Disclaimer

This gratuity estimate is based on the details provided. Tax exemptions are subject to lifetime caps and government employment status. Please consult your HR department or tax advisor for official figures.

For detailed rules, formulas, references, and official guidelines, see the complete Ganakam Calculation Methodology.

Frequently Asked Questions

For employees covered under the Payment of Gratuity Act 1972, the formula is: Gratuity = (Last Drawn Basic Salary + DA) × 15 × Years of Service / 26. In this formula, the years of service are rounded to the nearest year, meaning a period of 6 months or more is rounded up to 1 year.

For employees not covered under the Payment of Gratuity Act, the formula is: Gratuity = Average Basic Salary of Last 10 Months × 15 × Completed Years of Service / 30. Here, only completed years of service are counted, and any fractional years are ignored (floored).

Yes, gratuity received is tax-exempt up to a lifetime limit of ₹20 Lakhs (₹20,00,000) for non-government employees, under Section 10(10) of the Income Tax Act. For government employees, the entire gratuity received is completely tax-free.

Generally, an employee must complete at least 5 years of continuous service with a single employer to be eligible to receive gratuity. However, this 5-year rule is relaxed in the event of an employee's death or disablement during service.