Gratuity Calculator

For employees covered under the Payment of Gratuity Act: Gratuity = (Last drawn salary x 15/26) x Years of service. Last drawn salary includes basic + DA. For employees not covered under the Act, the formula is: (Last drawn salary x 15/30) x Years of service.

You must complete a minimum of 5 years of continuous service with the same employer to be eligible for gratuity. However, in case of death or disability, gratuity is payable even without completing 5 years.

For government employees, gratuity is fully exempt from tax. For private sector employees covered under the Gratuity Act, exemption is the least of: (1) Actual gratuity received, (2) Rs 20 lakh, (3) 15/26 x last drawn salary x years of service.

The maximum tax-free gratuity for private sector employees is Rs 20 lakh (enhanced from Rs 10 lakh in 2019). Any amount above Rs 20 lakh is taxable as salary income. There is no such cap for government employees.

Yes, most companies include the employer's gratuity contribution as part of CTC. Typically, it is 4.81% of basic salary (15/26 x 12/26 or simplified as basic x 0.0481 per month). It is a statutory benefit and must be paid to all eligible employees.